Withdrawal requests at Blue Owl Capital’s flagship non‑traded private credit funds dropped again in the third quarter, suggesting that redemption pressure is easing across parts of the U.S. market. Investors sought to pull $4.2 billion from the two funds, down from $4.7 billion in the prior quarter and a record $5.4 billion in the first quarter of the year.
Fund‑by‑fund breakdown
At the $35.1 billion Blue Owl Credit Income Corp. (OCIC), redemption requests fell to 16.8 % of shares, down from 18.8 % in the second quarter. Blue Owl said most of the requests reflected investors resubmitting previously unfulfilled tenders rather than new demand.
The technology‑focused Blue Owl Technology Income Corp. (OTIC) saw a slightly different picture. Investors sought to withdraw $1.1 billion, equal to 39 % of shares, a modest increase from 38.1 % in the prior quarter.
National context
Across the broader United States, the trend appears more encouraging. Goldman Sachs’ $18.2 billion GS Credit fund reported redemption requests equal to 2 % of shares, down from 3.2 % in the second quarter, while generating about $400 million of gross inflows.
Evercore analyst Glenn Schorr warned that the more persistent challenge for non‑traded business development companies may now be weak new subscriptions, as direct lending could take time to regain favour among wealth‑management clients and advisers.
International perspective
Outside the United States, liquidity stress has intensified. Australia’s Metrics Credit Partners, which manages about A$40 billion ($28 billion), froze redemptions in some unlisted funds after auditor KPMG declined to sign off on annual accounts for three listed vehicles. Metrics said KPMG disagreed with assumptions in preliminary financial statements, including the valuation of unlisted commercial real‑estate equity investments. The Australian corporate regulator is closely monitoring the sector after previously warning about valuation, liquidity, governance and transparency practices.
Looking ahead to refinancing risk
Even as redemption pressure cools in parts of the U.S. market, lenders are looking ahead to another potential test: refinancing. Blue Owl executives told sell‑side analysts that software portfolio performance has remained broadly stable, but refinancing risk could become more important as loans mature, particularly around 2028.
At Blue Owl Technology Finance Corp., software non‑accruals stood at 0.1 % of fair value and 0.6 % of cost, while median revenue growth and free‑cash‑flow margins have been stable for four quarters, according to Truist Securities.
Blue Owl management said stronger borrowers should be able to extend loans on tighter terms, while weaker credits may need to reduce leverage materially or could ultimately be sold or handed over to lenders.
Implications for investors
The easing of redemption requests provides some relief for fund managers, but the underlying subscription slowdown and upcoming refinancing cycles remain key considerations for wealth‑management advisers and their clients. Monitoring both domestic and international liquidity trends will be essential as the private credit market continues to evolve.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
