BlackRock Private Credit CLO Fails Tests as Bad Loans Mount

A portfolio of private credit loans managed by BlackRock Inc. has performed so poorly that the money manager has waived some management fees – a rarity in the credit world.

The asset manager funded the loans by selling bonds known as collateralized loan obligations, which means the portfolio has to perform well enough to regularly pass a series of tests. Failing to clear those hurdles can spur BlackRock to take steps to right the ship, through, for example, automatically diverting interest income away from riskier tranches and toward safer securities.