Blue Owl’s US$36 billion ($45.89 billion) private credit fund received requests from investors to cash in on 21.9% of outstanding shares but capped redemptions to 5% in the first three months of the year. Shares of the firm, which have become one of the favoured ways to bet on a sustained fallout due to the company’s elevated exposure to software businesses that could be laid low by AI, closed at a record low earlier this week.
The US$1.8 trillion private credit industry is facing an investor exodus amid concerns over lax lending standards and failure to clearly explain liquidity restrictions. Investors have sought to withdraw around US$13 billion from over a dozen funds in the first three months of the year, according to Bloomberg estimates and data from Robert A Stanger & Co. Heavyweights including Apollo Global Management Inc, Ares Management Corp, BlackRock Inc and Cliffwater LLC have all moved to limit redemptions. Meanwhile, Blue Owl’s smaller, tech-focused vehicle saw exit requests top 40%.
While the redemption limits kept net outflows contained, “we now expect elevated redemptions to persist in coming quarters and inflows could slow further from already reduced levels”, Moody’s added. As a result, the fund’s “currently strong capital and liquidity positions, which are relative credit strengths, could begin to dissipate as the company contends with net outflows over the outlook period”, it said.
“We remain confident that as one of only three non-traded BDCs with a Baa2 rating from Moody’s, Blue Owl Credit Income Corp remains well positioned to capitalise in the current market environment,” Blue Owl said in response to questions about the Moody’s move. The fund “has one of the most conservative financial profiles in the industry with leverage of just 0.8X and strong underlying credit performance”, it said.
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