Morgan Stanley (NYSE:MS) is prepping the launch of a structured interval fund focused on credit amid increased pressure for liquidity in the private credit sector.

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The North Haven Strategic Credit Fund will be structured as an interval fund and will invest in a "wide spectrum" of credit strategies, including:

• private corporate loans

• private hybrid financing solutions

• private asset-based loans

• private asset-backed lending facilities

• broadly-syndicated loans

• high-yield bonds

• securitized assets

• emerging market debt

The fund will also consider private credit investments through secondary market transactions. 

In addition, the fund will also seek investments in public credit, including public high-yield bonds, broadly syndicated loans, securitized bonds and emerging markets debt.

This strategy focuses on investing in liquid credit assets that provide "compelling returns" while also supporting liquidity management. It aims to identify relative value opportunities across a broad range of markets, including below-investment-grade corporate bonds and loans from U.S. and European issuers; senior and mezzanine tranches of securitized products such as collateralized loan obligations (CLOs); residential mortgages and commercial mortgages; and below-investment-grade sovereign, quasi-sovereign and corporate debt from emerging markets.

Additionally, the Fund may allocate capital to exchange-traded funds (ETFs), including those managed by Morgan Stanley, that implement public credit investment strategies.

The fund will offer quarterly repurchase offers between 5% and 25% of its outstanding shares at NAV, but generally anticipates repurchases of 5% of its outstanding shares every quarter.

"Shareholders may not be able to sell their shares when and/or in the amount they desire," the SEC filing noted.

Last month, JPMorgan also filed with the SEC for its JPMorgan Public and Private Credit Fund, which would allow investors to redeem 7.5% on a quarterly basis, Reuters reported.

JPMorgan also asked for an exemption to allow the fund to repurchase up to 2% of outstanding shares each month, the filing stated.

These new funds invested in public and private credit come amid a surge in investor withdrawal requests in the $3 trillion private credit market. Mounting pressure has prompted many banks and asset managers to cap withdrawals in recent weeks.

Apollo Global Management (NYSE:APO), Blackstone Inc. (NYSE:BX), and Barings BDC INC. (NYSE:BBDC) have all restricted investor withdrawals aggressively.

Semi-liquid vehicles typically offer 5% quarterly liquidity, but many are now overwhelmed by demand. 

Barings, for instance, capped redemptions after investors attempted to pull out 11.3% of shares in the first quarter, ultimately honoring only 44.3% of those requests on a pro-rata basis.

Meanwhile, Goldman Sachs (NYSE:GS) revealed that its private credit fund saw redemption requests of just under 5% of shares in the first quarter, crediting a resilient institutional investor base that is fundamentally more tolerant of illiquidity than the broader retail market.

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