Private Credit Firesale Begins: World's Largest Asset Manager Gates Investors In $26 Billion Fund

Three weeks ago, when the largest US Private Credit-focused asset manager Blue Owl, was faced with a flood of redemptions due to its outsized exposure to software loans (which are very rapidly being repriced to zero thanks to the disruption from AI), the firm opted against reinstating quarterly redemptions on a retail fund and decided to return investor capital through assets sales instead (effectively also freezing the money in it and gating investors ) announcing a massive $1.4 billion sale of private credit loans, a move which we said is a private credit echo of the memorable scene from Margin Call "be first, be smarter, or cheat." Specifically, we said the following:

While it is unclear how deep the secondary market for private credit assets is, to the extent demand is relatively scarce, a transaction of this size could dry up market liquidity. If that assumption is true, other BDCs looking to exit portfolio investments could be jeopardized. Recall the immortal line from Margin Call: "Be First, Be Smarter, or Cheat."

Well this could very well be Blue Owl's "Be First" moment... "Sell it all, today." Of course, it may be the case that the secondary market is only deep for higher quality private credit assets, like the ones in the portfolio OWL is selling. For example, OWL said all of the $1.4bn of assets it intends to sell were rated the highest quality based on its internal measure of risk (all 1s or 2s on a scale of 5), although that is like Jeffrey Epstein auditing himself, and finding he did nothing wrong. The worst case is if this transaction dries up secondary liquidity for private credit assets (or proves that the bid is only there for higher quality assets), and would be very negative for other BDCs exploring portfolio sales, namely NMFC, which has said it is pursuing the sale of $500mn of its portfolio (17% of total investments as of 3Q25).