Wall Street credit fund "redemption storm" continues: After Morgan Stanley, Singapore's GIC also requests redemption

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The collapse of an auto parts manufacturer is triggering a chain reaction at a Wall Street credit fund and further evolving into a redemption storm sweeping top investment institutions. Due to being hit by the bankruptcy of First Brands, Jefferies is facing continuous withdrawal pressure.

According to media reports on Wednesday citing sources, 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 move adds new variables to the intensifying "run-on-the-fund" storm.

Previously, other investors including BlackRock, Morgan Stanley Investment Management, and Texas Treasury Safekeeping Trust Company had also sought redemption. According to a previous article by Jiemian, Morgan Stanley has officially started its withdrawal process. A string of top institutions “voting with their feet” continues to put pressure on the fund.

Faced with concentrated redemptions from investors, fund manager Jefferies stated that redemption requests will take effect on December 31, and funds will be returned to investors in proportion via four quarterly payments, with the final payment expected to be completed in October 2026. This arrangement means that investors cannot withdraw immediately, and the exit of funds will be extended to nearly two years.

Redemption Storm Intensifies, Institutional Investors “Vote with Their Feet”

The center of this storm is the Point Bonita Capital fund managed by Jefferies’ asset management arm, Leucadia Asset Management. The fund is about $3 billion in size and focuses on the trade finance sector. However, roughly a quarter of its portfolio is related to accounts receivable from now-bankrupt auto parts manufacturer First Brands Group.

The direct trigger for the current redemption wave was the sudden collapse of the unlisted auto parts maker First Brands Group and the $12 billion worth of complex debts and off-balance-sheet financing it exposed. The highly concentrated risk to a single company caused First Brands’ bankruptcy to quickly transmit to the Point Bonita Capital fund and alarm investors.

As fund risks emerged, heavyweight institutional investors have been leaving one after another. According to sources, Singapore’s sovereign wealth fund GIC is the latest institution to request redemption.

Previously, according to media reports, other top Wall Street institutions have also taken action. Morgan Stanley Investment Management, the world’s largest asset manager BlackRock, and Texas Treasury Safekeeping Trust Company have all submitted redemption applications. The collective action by these institutions makes clear the market’s concerns about the fund’s future performance.

Fund Manager’s Response and Redemption Arrangement

As the fund manager, Jefferies issued a statement last Sunday evening in response to the situation. The statement said that after discovering issues with First Brands, its subsidiary Leucadia communicated directly with Point Bonita’s fund investors and agreed that it was reasonable for investors to submit redemption requests, aiming to “provide them with the greatest flexibility.”

At the same time, Jefferies defended its business relationship with First Brands. The bank stated it has been providing advisory services to First Brands for leveraged loan market financing for more than a decade, but was unaware of any fraudulent activity by the company. Jefferies emphasized that its own exposure to First Brands-related accounts receivable in the fund is small, at $43 million, or 5.9%.

According to redemption details disclosed by Jefferies, 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 final payment expected in October 2026. This schedule means that although investors have expressed the desire to exit, fund liquidity will be strictly managed to avoid forced low-price asset sales and allow time for an orderly liquidation of the fund.

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