TLDR
- Blue Owl Capital (OWL) stock fell nearly 6% Thursday and another 5% Friday after it sold $1.4 billion in loan assets across three private debt funds.
- The firm permanently removed quarterly redemption options from its retail-focused fund, Blue Owl Capital Corp II (OBDC II), sparking concerns about private credit liquidity.
- Blue Owl sold the loans at 99.7% of par value to three major pension funds and its own insurance affiliate, Kuvare.
- The stock has lost more than half its value over the past 12 months.
- Separately, Blue Owl failed to secure financing for a $4 billion data center project it was co-developing with CoreWeave in Pennsylvania.
Blue Owl Capital’s (OWL) stock dropped nearly 6% on Thursday and extended that decline with another 5% fall on Friday after the alternative asset manager announced it was selling $1.4 billion in loan assets and permanently ending quarterly redemption options in one of its retail-focused debt funds.
The two-day selloff has put OWL down more than 50% over the last 12 months.
The asset sale spans 128 portfolio companies across 27 industries. The biggest concentration, 13%, sits in software and services — a sector under pressure as AI tools threaten to disrupt traditional enterprise software models.
Blue Owl sold the loans at 99.7% of par, which the firm says validates its own book valuations. Buyers included three of North America’s largest pension funds and Kuvare, Blue Owl’s own insurance affiliate.
That last detail drew attention. “A lot of pushback this morning focusing on the fact that one of the four buyers of the loans was Kuvare, Blue Owl’s own insurance asset manager,” said Brian Finneran, managing director at Truist Financial.
The affected fund, Blue Owl Capital Corp II (OBDC II), is a semi-liquid private credit vehicle marketed to U.S. retail investors — mostly wealthy individuals. Blue Owl says its plan returns 30% of the net asset value to investors over the next 45 days, which it calls six times more capital than the standard quarterly tender offer would have allowed.
“We are not halting investor liquidity,” Blue Owl said in a statement Thursday. The company did not immediately respond to requests for further comment.
Private Credit Under the Microscope
The move rattled the broader private credit sector. Peers Apollo Global (APO) and KKR (KKR) also came under pressure as valuation uncertainty spread.
The private credit market has grown to roughly $3 trillion globally and has faced growing scrutiny following the bankruptcies of auto-parts maker First Brands and subprime lender Tricolor last year.
“This is a canary in the coal mine,” said Dan Rasmussen of Verdad Capital. “The private markets bubble is finally starting to burst.”
Not everyone agrees the situation is systemic. “We’re not to the point that we say what’s going on with Blue Owl is necessarily systemic,” said Steve Wyett, Chief Investment Strategist at BOK Financial.
Research from Duke University’s Fuqua School of Business shows institutional ownership of BDC vehicles has fallen to about 25% on average by 2023, with retail investors picking up the slack — a trend that raises the stakes when liquidity tightens.
The CoreWeave Problem
Adding to the pressure, Business Insider reported Friday that Blue Owl failed to secure financing for a $4 billion data center project it was co-developing with CoreWeave in Pennsylvania.
“And then the hits keep coming,” Finneran said.
The news comes months after Blue Owl closed a $27 billion deal to finance Meta’s largest data center project.
Blue Owl did not respond to a request for comment on the CoreWeave report.
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