Private credit has become one of Wall Street's hottest trades. Now it may be facing its first real stress test.

BlackRock, Inc. (NYSE:BLK) recently limited withdrawals from its $26 billion HPS Corporate Lending Fund after redemption requests surged to roughly 9.3% of the fund's net asset value, reported The Financial Times. The asset manager approved about $620 million in redemptions, hitting a 5% quarterly threshold that allows the fund to restrict additional withdrawals.

The move highlights a structural tension inside the fast-growing private credit industry.

Private Credit's Liquidity Question

Semi-liquid private credit funds have attracted hundreds of billions of dollars from wealthy individuals and retail investors searching for higher yields.

But as redemptions rise, the ...