Private Credit Faces Redemption Wave as BDCs Slow New Lending

Business development companies, which funnel private credit to middle-market borrowers outside traditional loan and bond markets, faced sharply slowing inflows in Q2 2026 and mounting redemption requests, the Federal Reserve's June FOMC minutes reveal. Net outflows are likely to accelerate, potentially forcing BDCs to curtail originations or draw on reserves to meet exits—a stress signal for firms dependent on this alternative funding channel.