Cliffwater LLC's flagship private credit fund has once again capped redemptions at 5% for the third quarter, after investors sought to withdraw approximately 16% of the fund's total assets.

The $31 billion Cliffwater Corporate Lending Fund informed shareholders on Thursday that they would ultimately receive only about one-third of their requested redemption amounts, according to sources familiar with the matter. This proportion is broadly in line with the previous quarter, when investors sought to cash out roughly 17% of the fund.

The fund stated that it "remains committed to acting in the best interests of shareholders," noting that investors who have submitted cash redemption requests since the first quarter of this year have now recovered 78% of their invested capital.

"We remain optimistic about the resilience of private credit," Cliffwater Chief Executive Officer Stephen Nesbitt said in the letter.

This fund is the largest so-called "interval fund" within the $1.8 trillion private credit market. It attracts significant market attention because it has helped Cliffwater rapidly grow into an unexpected powerhouse in the direct lending space: the firm has swiftly raised capital and deployed it extensively into loans and other funds.

In the first quarter of this year, investors in the Cliffwater fund sought to redeem approximately 14% of its shares, ultimately recovering about half of that amount when the fund set a 7% withdrawal cap. Subsequently, the fund lowered the redemption limit available to investors to 5%, aligning with other private credit vehicles known as "non-traded business development companies" or non-traded BDCs.

The largest such BDC — the $77 billion Blackstone Private Credit Fund — disclosed on Thursday that it would again set its redemption cap at 5% after investors requested withdrawals of approximately 10% of its shares.

The situation at both funds indicates that while investors who have repeatedly filed redemption requests are beginning to recover more of their capital, the overall redemption backlog of roughly $15 billion may remain stable, as new investors simultaneously begin seeking exits.