Key Takeaways
- • Blue Owl's largest publicly traded private credit fund, Blue Owl Capital Corp (OBDC), will reduce its software exposure, with software assets falling to 16% of the portfolio from 19% in the first quarter, according to CEO Craig Packer.
- • OBDC marked its assets down 2.7% to $14.41 per share in Q1 and cut its quarterly dividend to 31 cents from 36 cents per share.
- • Blue Owl Technology Finance Corp (OTF), the smaller software-focused fund, cut its valuation 4.8% to $16.49 per share and says its threshold for new investments "has never been higher."
- • The two funds bought back a combined $85 million of their own stock in the first quarter.
- • Blue Owl shares remain roughly 30% lower year to date, and OBDC and OTF shares fell 2.4% and 5.5% respectively on the day of the announcement.
Summary
Blue Owl Capital's largest publicly traded private credit fund will seek to reduce its exposure to software companies, chief executive Craig Packer told analysts on a conference call on Thursday, May 7, 2026, according to Reuters. Packer said uncertainty about the impact of artificial intelligence on the sector has roiled valuations for software assets held by direct lenders, which invested heavily in enterprise software during and after the COVID-19 pandemic and have since grown more concerned about the high valuations assigned to some of those assets.
The share of software assets in Blue Owl Capital Corp (OBDC) fell to 16% from 19% in the first quarter. Packer said the decline occurred "naturally" as borrowers repaid loans, and added: "We're going to continue to be, I think, very cautious in software, and as we get repayments probably look to continue to take that down."
A smaller Blue Owl vehicle focused on software, Blue Owl Technology Finance Corp (OTF), will continue to lend to the sector but with greater selectivity. President Erik Bissonnette said on a separate call that the "threshold for new investments has never been higher," adding: "As we evaluate opportunities against a rapidly evolving AI landscape, we are increasingly selective, continuing to pass on legacy models."
The markdowns reflect broader pressure in the publicly traded loan market. OBDC reduced the value of its assets by 2.7% to $14.41 per share in the first quarter and cut its dividend to 31 cents from 36 cents per share. OTF lowered its valuation by 4.8% to $16.49 per share. Packer said it had been harder to deliver earnings due to lower rates and risk premiums, but described borrower performance as stable and expects stronger demand for direct lending. The two funds together repurchased $85 million of their own stock in the first quarter.
Blue Owl has faced heightened scrutiny as private credit has come under pressure. According to Reuters, its stock has recovered from lows hit in March and April but remains about 30% lower year to date. On the day of the announcement, OBDC shares were down 2.4% (down 7.7% year to date) and OTF shares were down 5.5% (down about 23.5% year to date).
The share of software assets in Blue Owl Capital Corp (OBDC) fell to 16% from 19% in the first quarter. Packer said the decline occurred "naturally" as borrowers repaid loans, and added: "We're going to continue to be, I think, very cautious in software, and as we get repayments probably look to continue to take that down."
A smaller Blue Owl vehicle focused on software, Blue Owl Technology Finance Corp (OTF), will continue to lend to the sector but with greater selectivity. President Erik Bissonnette said on a separate call that the "threshold for new investments has never been higher," adding: "As we evaluate opportunities against a rapidly evolving AI landscape, we are increasingly selective, continuing to pass on legacy models."
The markdowns reflect broader pressure in the publicly traded loan market. OBDC reduced the value of its assets by 2.7% to $14.41 per share in the first quarter and cut its dividend to 31 cents from 36 cents per share. OTF lowered its valuation by 4.8% to $16.49 per share. Packer said it had been harder to deliver earnings due to lower rates and risk premiums, but described borrower performance as stable and expects stronger demand for direct lending. The two funds together repurchased $85 million of their own stock in the first quarter.
Blue Owl has faced heightened scrutiny as private credit has come under pressure. According to Reuters, its stock has recovered from lows hit in March and April but remains about 30% lower year to date. On the day of the announcement, OBDC shares were down 2.4% (down 7.7% year to date) and OTF shares were down 5.5% (down about 23.5% year to date).
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