Private credit roundup: Blue Owl redemptions ease, tech and refinancing risks persist

Investors sought to withdraw $4.2 billion from Blue Owl’s two non-traded private credit funds in the third quarter, down from $4.7 billion in the second quarter and a record $5.4 billion in the first. Requests at the $35.1 billion Blue Owl Credit Income Corp. fell to 16.8% of shares from 18.8%; Blue Owl said most reflected resubmitted tenders that had not previously been fulfilled. At technology-focused Blue Owl Technology Income Corp., requests rose to $1.1 billion, or 39% of shares, from 38.1%.

Goldman Sachs’ $18.2 billion GS Credit fund reported requests equal to 2% of shares, down from 3.2% in the second quarter, and generated about $400 million of gross inflows. Evercore analyst Glenn Schorr said weak new subscriptions may be a more persistent challenge for non-traded business development companies, as direct lending could take time to regain favour among wealth-management clients and advisers. In Australia, Metrics Credit Partners froze redemptions in some unlisted funds after KPMG declined to sign off on annual accounts for three listed vehicles, citing disagreements over assumptions including valuations of unlisted commercial real-estate equity investments.

Blue Owl executives told sell-side analysts that software portfolio performance had remained broadly stable, but refinancing risk could grow as loans mature, particularly around 2028. At Blue Owl Technology Finance Corp., software non-accruals were 0.1% of fair value and 0.6% of cost, while median revenue growth and free-cash-flow margins had been stable for four quarters. 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.