Private credit giants Ares Management and Apollo Global Management have restricted investor redemptions, limiting withdrawals to less than half of the requested amounts, highlighting mounting pressure in the $1.8 trillion market.

According to shareholder letters issued on Tuesday, the $10.7 billion Ares Strategic Income Fund capped redemptions at 5% despite clients seeking to redeem 11.6% of their holdings. Earlier, business development company Apollo Debt Solutions announced a similar 5% redemption cap on Monday after facing redemption requests totaling 11.2%.

These withdrawal requests, proportionally higher than those recently seen at funds managed by Blackstone and BlackRock, indicate growing investor concern over potential liquidity strains in the less-liquid private credit market.

Some of the world’s largest alternative asset managers, which fueled the private credit boom in recent years, are now confronting a shift in investor sentiment. Many investors are growing wary of the industry’s lending model and its exposure to companies vulnerable to disruption from artificial intelligence. The rapid increase in redemption requests has also raised questions about whether the direct lending model is suitable for investors seeking liquidity.

In response to rising negative sentiment, asset managers have adopted different strategies. Blue Owl Capital has begun selling assets, while Blackstone has used employee capital to help meet redemption demands. However, most firms have opted to restrict redemptions, emphasizing the benefits of this approach.

On Tuesday, the latest wave of investor unease wiped out approximately $10.2 billion in market value from Ares, Apollo, and rivals Blackstone and KKR & Co., with shares of all four asset managers falling more than 2%.