New Delhi, March 23 -- Private-credit managers are trying to disprove a negative-and it has created the biggest upheaval for the $1 trillion market since it came on the scene after the financial crisis.

Fears that private-credit funds have big batches of bad loans have rocked the business. The funds make junk-grade loans with yields of close to 10% to private companies.

While the number of defaults has been low, investors have been lining up to exit semiliquid private funds like Blackstone Private Credit, known as BCRED, and BlackRock's HPS Corporate Lending fund. Publicly traded business development companies, or BDCs, which hold similar loans, are down an average of 10% this year and recently traded at an average discount of 25% from ...