Private credit’s ‘math problem’ points to yearslong liquidity backlog

Jun 30

5 min read

Updated: Aug 18

Headlines may get worse for BDC managers even if the redemption stress has peaked, says industry veteran Mark Goldberg.

July 1, 2026 I By Alexander Davis

Alexander Davis, Pitchbook- Market Insights, 1 July 2026, “Private credit’s ‘math problem’ points to yearslong liquidity backlog”, https://pitchbook.com/news/articles/private-credit-semiliquid-funds-yearslong-liquidity-backlog?

Mark Goldberg has spent four decades in private markets, including as CEO of Griffin Capital before its acquisition by Apollo Global Management. Today, as an independent researcher, he’s become one of the more pointed voices challenging how the private credit industry navigates the waves of redemption requests pouring in from its wealth clients.

In a research paper he published June 25, Goldberg compares the redemption queues building inside non-traded BDCs to the travel backlog after a nor’easter: The storm passes, runways get plowed, but stranded travelers still can’t get home because there aren’t enough open seats to absorb the backlog quickly. Goldberg argues the same dynamic governs private credit redemptions today. Funds cap quarterly redemptions at roughly 5% of net asset value. When demand exceeds that cap, the unmet requests don’t disappear—they roll forward and stack on new demand the following quarter, regardless of whether sentiment is improving.

In this condensed conversation, Goldberg explains why he thinks the math points toward multi-year clearing timelines for several major funds, and what he believes managers will ultimately have to do about it.

PitchBook: You compare the redemption backlog to the aftermath of a nor’easter. Walk me through the analogy.

Goldberg: Flights are typically booked 80-90% in advance. So when an event disrupts travelers—a nor’easter, say, as in last February, most recently, where roughly 9,000 flights were canceled—the unutilized seat capacity is very narrow. After the storm passes, the runways are plowed. That doesn’t mean you’re taking off anytime soon. It may take a week, because there isn’t sufficient exit capacity. That’s what’s happening in private credit. A lot of people wanted out of these funds, and depending on the fund’s profile, normal capacity to exit ranges from about 1.25% a quarter for an early-stage fund up to 3.25% for a large, mature one. Cap redemptions at 5%, and that mature cohort only has about 1.75% of real spare capacity. If a fund has 20% of investors trying to get out and only 1.75% of capacity a quarter, that’s not two or three quarters. That’s years.

Are fund managers not seeing this reality, or not talking about it accurately?

I don’t want to assume anything about why they’re saying it. I’m dealing with the reality of the math, and math doesn’t have narratives or spin. Math is truth. I suspect most private credit managers in the wealth space come from an institutional background, with limited experience working with retail clients through a stress period like this—so it’s natural to think that once media coverage passes, things go back to normal. My recommendation to both advisers and managers is to reconsider that timeline, because if you tell clients they’ll redeem out in two or three quarters and it takes two or three years, you’ve lost their confidence for a very long time.

The caps on redemptions are doing their job—protecting long-term investors from forced asset sales. So what’s the actual risk here?

I don’t want readers to think I’m coming from a dark place—I’ve believed in and invested in private markets for four decades. But these structures haven’t been around as long as people assume: The first successful perpetual BDC is roughly 20 years old, the first daily-NAV one dates to 2011, and the first breakthrough interval credit fund is only seven. So I’d ask: When these products were designed, did anybody contemplate redemption demand hitting 15% to 40% of NAV in a single quarter, persisting for years above the cap? Let’s agree the answer is no. If so, the industry should acknowledge these products are operating outside their design assumptions. Are they operating as designed? Yes, but the design is flawed, and the industry won’t solve that by complaining about coverage or reassuring everyone the queues will resolve shortly.

So further down the road, the industry will have to revisit the design of fund structures for the wealth channel?

The next phase of innovation will have to solve for it; evolution is inevitable. As for the portfolios, average duration is under three years, enough to fund redemptions up to the 5% cap. But that doesn’t solve the other problem: Some funds will contract because they can’t attract capital. It’s hard for an adviser to allocate to a fund capping liquidity when they could allocate elsewhere. Managers need to plan for balance-sheet contraction while still executing well. Assume the fund will always grow, ignore that this demand will persist, and you run into trouble.

Institutional capital is still strong. Could that offset the wealth-channel pressure?

Private credit is a big universe with subsets that perform differently, but overall it’s performed terrifically for two decades. That’s the institutional experience, and it stands somewhat apart from the friction private wealth is feeling now. There are really two funding sources within the same market, each drawing on its own experience. Institutional capital has every reason to keep investing, not because it’s more opportunistic now, just because of strong returns. The challenge is that private wealth investors’ expectations and their actual experience aren’t lining up. My concern is that managers have to be careful about how they characterize those investors’ decisions in a way that doesn’t alienate them down the road.

So what should these managers actually be doing about the redemption queues?

I’m talking my own book here, but I believe the market will reach the same conclusion as my research, whether managers get there by reading it or by waiting out the quarters. That conclusion—that private wealth clients won’t get out of a fund for years—is untenable. Sponsors will need to address it: bring in a material increase in new capital to resolve the queue, and possibly pursue portfolio monetizations, structural solutions, listings or other liquidity events. No sponsor can afford redemption caps remaining binding for years. What begins as a liquidity feature becomes a confidence issue, and that’s not a position any franchise wants. That’s not every fund—if your queue clears in two or three quarters, no problem. But at a 20% backlog, you have to find a solution. And they will, because it’s untenable.

Mark Goldberg is the founder of Alternative Investments Market Intelligence (AltsMI.com). He has served as chief executive officer of investment management and broker-dealer firms and received the Institute for Portfolio Alternatives’ Lifetime Achievement Award for his contributions to the wealth management industry. Through AltsMI.com, Mark publishes the Alts Leaders Survey and research on private-market adoption in the wealth channel. His commentary and published research are widely read, and he is a featured speaker at industry events.