Blue Owl Capital Sets Off New Fears About the Private Credit Industry
The New York Times • • general
Key Points:
- Blue Owl Capital's shares dropped 6% after the company announced it would limit investors' ability to redeem fixed amounts from one of its funds, opting instead to determine quarterly payouts at its discretion.
- The announcement raised investor concerns about potential redemption obstacles, contributing to declines in other private credit firms like Ares, Apollo, and Blackstone, which also fell over 5%.
- Mohamed El-Erian likened Blue Owl's move to early signs of the 2007 financial crisis, highlighting fears about underlying risks in the private credit sector.
- Private credit has grown rapidly, with firms like Blue Owl managing nearly $300 billion, but the industry operates with less transparency and regulation compared to traditional banks.
