Blackstone's $48bn flagship private credit fund, Bcred, posted its first monthly loss since September 2022, declining 0.4% in February. The fund marked down several loans, including its position in Medallia, a customer service software company whose business has underperformed since its 2022 buyout by Thoma Bravo. Market declines in the broader liquid loan sector also contributed to the negative performance.

Investor scrutiny of the $2tn private credit market has intensified as returns slide and redemption requests surge. Bcred suffered $1.7bn in net outflows during the first quarter, with withdrawal requests reaching 7.9% of assets. While Blackstone honored all redemptions, peers like Morgan Stanley, Cliffwater, and BlackRock's HPS Investment Partners limited withdrawals as requests exceeded thresholds.

Bcred's returns have weakened since the Federal Reserve began cutting interest rates, posting a 6.4% total return over the past year. The fund continues to deliver strong performance compared to leveraged loan benchmarks, with a 9.5% annualized return since inception. Medallia's struggles reflect broader concerns about enterprise software companies' long-term durability as AI advances reshape the competitive landscape.