Deteriorating asset quality, collateral markdowns, and a growing rush for the exits are impacting private credit markets, leading to comparisons to the Global Financial Crisis. Ares Management has decided to limit investor withdrawals from its $10.7 billion private credit fund, following Apollo Global Management's similar measures. Other managers, including Blue Owl Capital and Cliffwater, have also restricted withdrawals due to rising default fears. Morgan Stanley has warned that default rates in private credit direct lending could surge to 8%, well above the 2-2.5% historical average. Industry experts believe this could help shake out pockets of stress from the $3 trillion sector and provide a "healthy reset" after its first major liquidity test. Concerns over credit quality have spread through private markets following high-profile collapses in the U.S. auto parts sector last year.