Key Takeaways
- • Blue Owl disclosed in early April 2026 that investors requested to redeem 21.9% of the cash in its flagship Credit Income Corp (OCIC) fund and 40.7% of its smaller Technology Income Corp (OTIC) fund between January and March.
- • Blue Owl capped withdrawals at 5% of each fund's value per quarter, a limit also placed by Apollo Global Management, Ares Global Management and Barings on their BDCs.
- • Data from RA Stanger, seen by Reuters, shows inflows into BDCs in the first three months of 2026 fell 45% from 2025 levels.
- • Moody's downgraded the outlook on the OCIC fund from 'stable' to 'negative', citing significantly higher-than-peer redemption requests in the first quarter.
- • Bank of England deputy governor Sarah Breeden and J.P. Morgan CEO Jamie Dimon have flagged concern about losses, though both stopped short of calling it a systemic threat; St. James's Place analyst Richard Wicks attributes recent moves mainly to sentiment rather than deteriorating credit quality.
Summary
Private credit funds have grown rapidly in popularity among high-net-worth individuals and family offices, which have sought higher returns than investment-grade bonds by lending to private companies that cannot access bank financing. A BlackRock 2025 Global Family Office report found 51% of family offices were bullish on the asset class, with 21% viewed it negatively. That sentiment is now shifting, according to the article.
Funds have lent heavily to software firms, attracted by high margins and recurring revenue. Fears that artificial intelligence will disrupt the software sector, including tools such as OpenAI's Frontier enterprise agent platform, have raised questions about borrowers' ability to repay. This has put business development companies (BDCs), the vehicles that provide exposure to private credit, under scrutiny.
Data from RA Stanger, seen by Reuters, shows inflows into BDCs in the first quarter of 2026 were down 45% from 2025. Investors have also sought redemptions. Many BDCs have open-ended or evergreen structures that allow withdrawals. Blue Owl reported that redemption requests covered 21.9% of OCIC's cash and 40.7% of OTIC's between January and March. Blue Owl attributed the requests to "a period of heightened negative sentiment toward the asset class" and capped withdrawals at 5% per fund per quarter. Moody's cited OCIC's "significantly higher-than-peer redemption requests" in revising its outlook to negative.
Sarah Breeden, deputy governor of the Bank of England, told the BBC she is more concerned about a "private credit crunch" than a banking-driven one. Jamie Dimon, CEO of J.P. Morgan, expects private credit losses to exceed expectations in coming months but said on the bank's first-quarter earnings call that actual credit has not deteriorated much, with some pockets of weakness. Richard Wicks of St. James's Place said recent movements are driven more by sentiment than material credit deterioration, with isolated stress mainly in software. Blue Owl maintains that its underlying credit fundamentals remain resilient.
Quarterly earnings from Blue Owl and other private credit lenders over the coming weeks will provide greater clarity on loan losses and the outlook for the remainder of 2026. Wicks notes that long-standing, experienced investors have largely remained committed, and the article suggests that high-risk-tolerant, long-horizon HNW investors are likely to remain active in the asset class despite short-term volatility.
Funds have lent heavily to software firms, attracted by high margins and recurring revenue. Fears that artificial intelligence will disrupt the software sector, including tools such as OpenAI's Frontier enterprise agent platform, have raised questions about borrowers' ability to repay. This has put business development companies (BDCs), the vehicles that provide exposure to private credit, under scrutiny.
Data from RA Stanger, seen by Reuters, shows inflows into BDCs in the first quarter of 2026 were down 45% from 2025. Investors have also sought redemptions. Many BDCs have open-ended or evergreen structures that allow withdrawals. Blue Owl reported that redemption requests covered 21.9% of OCIC's cash and 40.7% of OTIC's between January and March. Blue Owl attributed the requests to "a period of heightened negative sentiment toward the asset class" and capped withdrawals at 5% per fund per quarter. Moody's cited OCIC's "significantly higher-than-peer redemption requests" in revising its outlook to negative.
Sarah Breeden, deputy governor of the Bank of England, told the BBC she is more concerned about a "private credit crunch" than a banking-driven one. Jamie Dimon, CEO of J.P. Morgan, expects private credit losses to exceed expectations in coming months but said on the bank's first-quarter earnings call that actual credit has not deteriorated much, with some pockets of weakness. Richard Wicks of St. James's Place said recent movements are driven more by sentiment than material credit deterioration, with isolated stress mainly in software. Blue Owl maintains that its underlying credit fundamentals remain resilient.
Quarterly earnings from Blue Owl and other private credit lenders over the coming weeks will provide greater clarity on loan losses and the outlook for the remainder of 2026. Wicks notes that long-standing, experienced investors have largely remained committed, and the article suggests that high-risk-tolerant, long-horizon HNW investors are likely to remain active in the asset class despite short-term volatility.
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