NEW YORK, Feb 20, 2026, 09:57 EST
Shares of Blue Owl Capital (OWL.N) dropped roughly 4% in premarket action Friday, as the private credit firm halted quarterly withdrawals on a smaller retail debt fund and lined up $1.4 billion in loan sales to cover redemptions. The stock closed down almost 6% on Thursday and has now plunged more than 36% in 2025. “Sentiment and headlines” are what’s moving the stock, said Piper Sandler analyst Crispin Love. (Reuters)
Investors are zeroing in on the shift as a live demonstration for private credit—those loans made outside the traditional banking system and usually stashed in funds that don’t offer daily trading—just as they’re ramping up scrutiny of how managers value hard-to-sell assets. Economist Mohamed El-Erian didn’t mince words, calling it a possible “canary-in-the-coalmine” event and warning that some assets may soon face a valuation hit, a pattern he’s seen before leading up to periods of market stress. (Reuters)
Blue Owl’s move has reignited debate over semi-liquid funds—those that invest in private loans yet promise regular cash-outs for affluent investors. According to InvestmentNews, the situation has brought liquidity risk and valuation practices back under the microscope. Shares of listed alternative asset managers such as Apollo Global Management and Blackstone took a hit as a result. (Investmentnews)
Blue Owl’s BDCs announced on Feb. 18 they’d reached deals to offload $1.4 billion in direct-lending assets at 99.7% of par, as measured on Feb. 12. The breakdown: $600 million coming out of Blue Owl Capital Corporation II, which is non-traded; $400 million each from Blue Owl Technology Income Corp and the listed Blue Owl Capital Corporation (OBDC). The portfolio—97% senior secured—covers 128 companies in 27 different industries. Internet software and services make up the largest part at 13%, according to the company. (PR Newswire)
OBDC II is lining up a return-of-capital payout, planning up to $2.35 per share—or roughly 30% of net asset value, that’s assets less liabilities as of Dec. 31, 2025. The payment would land on or before March 31, pending board signoff. President Logan Nicholson said the move “reinforces the rigor” of Blue Owl’s valuation process and delivers a “significant liquidity event” at fair value. (Blue Owl Capital Corporation)
During Thursday’s earnings call, co-founder Craig Packer pushed back, saying headlines had “mischaracterized” the firm’s move. According to Packer, they’re “accelerating redemptions,” not blocking them. He explained a tender offer—a typical buyback allowing investors to request share repurchases—can end up treating investors unevenly. With a pro-rata payout, by contrast, everyone walks away with cash at the same time. (The Motley Fool)
Blue Owl moved to reassure investors, stating it’s “not halting investor liquidity” in OBDC II and pledging to return 30% of the fund’s value within 45 days—a shift from its usual quarterly tender, which allowed redemptions of up to 5% of capital. The firm said it plans to stick with this approach in the quarters ahead. (Reuters)
Even so, a chunk of the market took the asset sale as a hint withdrawal requests were piling up fast enough to force the hand on selling higher-quality loans. Truist Securities analyst Brian Finneran argued the loans “should be fetching premiums to par,” but with negative sentiment in play, Oppenheimer’s Mitchel Penn said, “nobody is getting a break.” (Reuters)
According to people familiar with the deal, CalPERS, OMERS, British Columbia Investment Management Corp, and insurer Kuvare all picked up assets, Bloomberg reported. (Bloomberg)
Blue Owl’s near-par sale goes a long way to back up its claim that portfolio valuations are solid, but it doesn’t clear up what happens if more cash-hungry investors want out at once. Redemption requests for OBDC II had already run above the usual 5% quarterly threshold, according to FA-mag, and the revamped setup still hinges on repayments and asset sales coming through as scheduled. Citizens Financial Group, in a note, dubbed par-level loan sales a “win-win”—but that’s only until another round of withdrawals puts the strategy to the test. (Fa Mag)
