"Unprecedented" Withdrawal Requests Just Hit Private Credit
Submitted by QTR's Fringe Finance
We're starting to see some scary sh*t in private credit.
Moments ago, it was reported that one private credit company has effectively frozen up under a wave of redemption requests, an abrupt liquidity crunch that will likely do lasting damage to what little credibility it still had with investors.
This is exactly the kind of stress event I’ve been expecting ever since I flagged that psychology in the private credit space was starting to break—and I still believe conditions in private credit will get worse before they get better.
I’ve been flagging the sector as one of ten that I see as an avoid at all costs, and just days ago I wrote that conditions were worse than they appeared on the surface. This latest development only reinforces that view.
According to reporting from Bloomberg, Blue Owl Capital Inc. is now limiting redemptions from two of its flagship private credit funds after facing an unprecedented surge in withdrawal requests in the $1.8 trillion market.
Blue Owl shares are down 9% in pre-market to $7.89.
They are now down -41% so far this year.
Investors in the $36 billion Blue Owl Credit Income Corp. asked to redeem 21.9% of shares in the latest quarter (up from 5.2%), while the smaller Blue Owl Technology Income Corp. saw redemption requests spike to a staggering 40.7% (up from 15.4%).
Despite previously meeting withdrawals above their standard limits, the firm is now capping redemptions at 5%, effectively gating investor exits. In practical terms, that means billions in requested withdrawals are not being honored—roughly $3.2 billion remains locked in the larger fund alone.
Recall just days ago I highlighted how things were likely far worse in private credit than they appeared.
As I’ve written, investors have already started pulling money, with withdrawals hitting records just as concerns about software exposure and valuation pressure have picked up.
What happens next from here shouldn’t surprise anyone who’s been paying attention. If anything, this is just the beginning. As we move into Q2, expect....(READ THIS FULL ANALYSIS HERE).