The bankruptcy of an auto parts manufacturer is triggering a chain reaction for a credit fund on Wall Street, escalating into a redemption wave affecting top investment institutions. Jefferies is facing ongoing withdrawal pressure due to its exposure to the bankrupt firm First Brands.

According to sources cited by the media, the latest move comes from Singapore's sovereign wealth fund GIC, which has been negotiating with Jefferies in recent weeks and has requested to redeem part of its funds from Jefferies' Point Bonita Capital fund. This action adds a new variable to the intensifying credit fund crisis.

Previously, other investors, including BlackRock, Morgan Stanley's asset management division, and the Texas Permanent School Fund, had also sought redemptions. Reports indicate that Morgan Stanley has formally initiated its withdrawal process. This series of 「voting with their feet」 by top institutions continues to apply pressure on the fund.

In response to concentrated redemption requests from investors, the fund manager Jefferies has stated that redemption requests will take effect on December 31, and funds will be returned to investors through four quarterly payments, with the final payment expected to be completed by October 2026. This arrangement indicates that investors will not be able to exit immediately, as the withdrawal process will extend over nearly two years.

The crisis is centered around the Point Bonita Capital fund managed by Jefferies’ asset management division, Leucadia Asset Management. This fund, which has approximately $3 billion in assets, focuses on trade financing. However, about a quarter of its portfolio is tied to receivables from the bankrupt auto parts manufacturer First Brands Group.

The direct trigger for this wave of redemptions was the sudden collapse of the unlisted auto parts manufacturer First Brands Group, revealing complex debt and off-balance-sheet financing issues amounting to nearly $12 billion. The high-risk exposure to a single company allowed the bankruptcy of First Brands to quickly impact the Point Bonita Capital fund, raising alarms among investors.

As risks within the fund have become evident, heavyweight institutional investors are opting to exit. Reports indicate that Singapore's GIC is the latest institution to request redemption.

Prior to this, other top Wall Street firms have already taken action. Morgan Stanley's asset management division, the world’s largest asset manager BlackRock, and the Texas Permanent School Fund have all submitted redemption requests. The collective actions of these institutions clearly reflect market concerns regarding the fund's future performance.

In response to the redemption situation, Jefferies issued a statement over the weekend. The statement indicated that after discovering issues with First Brands, its subsidiary Leucadia directly communicated with Point Bonita's fund investors and agreed that submitting redemption requests was a reasonable choice to "provide them with maximum flexibility."

Additionally, Jefferies defended its business relationship with First Brands, stating that it has advised First Brands on financing in the leveraged loan market for over a decade but was not aware of any fraudulent activities. Jefferies emphasized that its investment exposure to the receivables related to First Brands within the fund is small, amounting to $43 million, or 5.9%.

According to Jefferies' disclosure of redemption details, all redemption requests will take effect on December 31. At that time, the fund will return funds to investors in four quarterly payments, with the last payment expected to be in October 2026. This timeline signifies that, although investors have expressed a desire to exit, liquidity will be tightly managed to prevent forced low-priced asset sales, allowing time for an orderly liquidation of the fund.