Blue Owl Capital faced massive withdrawal attempts exceeding $5 billion across its funds in the first quarter, according to major media reports. The firm blocked some redemptions from two flagship funds to stabilize portfolios. Its $36 billion private credit fund received requests from investors to cash in on 21.9% of outstanding shares but capped redemptions at 5% during the first three months of the year, multiple reports indicate. The firm's shares have tumbled 44.6% this year to date, trading at $8.4.
Severe redemption pressures hit Blue Owl's specific funds. The Blue Owl Technology Income Corp fund saw redemption requests reach 41% of its $3 billion value between January and end of March 2026, major media reports. The Blue Owl Credit Income Corp fund suffered redemption requests worth 22% of its $20 billion value. Blue Owl limited withdrawals to 5% at its funds, enacting a cap that many private credit funds have. Moody's Ratings downgraded the outlook on Blue Owl Capital's flagship fund from stable to negative, according to multiple reports.
Apollo Global Management faced a parallel crisis, capping redemptions from one of its biggest private credit funds after investors tried to pull $1.6 billion over the last three months, multiple reports indicate. Withdrawal requests for Apollo's fund totaled 11.2% of the fund's $15 billion in net assets, more than double the 5% quarterly cap. Apollo confirmed it would maintain the 5% cap on redemptions. The firm's shares are down 24.6% this year to date, trading at $110.4.
Regulators have issued warnings. Bank of England governor Andrew Bailey warned of parallels between the private credit boom and the subprime debt boom that led to the 2008 global financial crisis. The Bank of England identified private credit as a key concern in a Financial Policy Committee report this week, according to major media. What specific actions regulators like the Bank of England plan to take to address these risks remains unclear.
Root causes of the turmoil include market stress beginning in September 2025, following the back-to-back bankruptcies of auto lender Tricolor and car-part maker Firstbrands, multiple reports indicate. Fears grew that AI could knock out traditional software as well as lending standards in some areas of the market. The ongoing Middle Eastern conflict has raised worries, with rocketing oil prices threatening to feed into inflation, piling pressure on central banks to keep interest rates higher.
The crisis has broader industry impact. Other major players including KKR, BlackRock, and Morgan Stanley have similar limits on some funds, major media reports. Blackstone, Blue Owl, JP Morgan, and Clearwater have also been rocked by the crisis, according to multiple reports. The European private credit market has yet to see the same scale of redemption pressure as parts of the US. How many other private credit funds beyond Blue Owl and Apollo are currently capping redemptions or facing significant withdrawal pressures is not fully known, nor is the total amount of investor withdrawals across the entire sector in the first quarter.
Investor behavior is shifting. Investors have been attracted to higher risk private credit funds by the potentially higher gains on offer, with greater interest rates paid than on traditional loans and corporate bonds, major media reports. Most of the money has come from professional investors and hedge funds, but individual investors have been able to access the market via specialist funds. Many investors are retreating back to the safety of liquid assets, such as stocks and bonds, according to multiple reports. Others are becoming even more cautious, opting to flee the investment market altogether for the safety of cash or fixed-income products.