Shares of Blue Owl Capital experienced a modest decline in Thursday's trading session, shedding approximately 0.7% to trade around $9.05 by midday in New York. The movement followed analysis from Bank of America suggesting the recent market panic surrounding private credit asset managers has been disproportionate to the underlying risks.
Analyst Perspective Amid a Sharp Selloff
Bank of America's commentary arrives as Blue Owl, alongside other publicly traded firms in the space, has faced severe pressure. The stock has plummeted nearly 40% since the start of the year, enduring its worst monthly decline on record in February. Indicative of the bearish sentiment, short interest reached a historic peak of 14.1% of the company's free float as of March 5.
The challenges are not confined to a single company. Reports this week indicate that major Wall Street investment banks have begun to tighten lending standards across the private credit sector. Furthermore, several prominent asset managers, including Morgan Stanley, BlackRock, Blackstone, and Cliffwater, have implemented measures to restrict or manage withdrawal requests from their significant private credit funds in response to a surge in redemption activity.
Not a Repeat of 2008, Says BofA
Led by analyst Craig Siegenthaler, the Bank of America team sought to calm nerves, explicitly stating the current situation is "not a GFC repeat," referring to the 2008 global financial crisis. They characterized the market's reaction as based on "mainly a few minor data points." For context, the analysts highlighted that business development companies (BDCs) typically employ leverage ratios around two times, a fraction of the levels held by institutions like Bear Stearns and Lehman Brothers preceding the last major crisis.
Despite the turbulent backdrop, Bank of America maintained its buy ratings on Blackstone, KKR, and Blue Owl. It elevated Ares Management to its top pick within the group. Trading on Thursday reflected a mixed picture, with Ares shares gaining about 1.2%, while Blackstone fell 2.1% and KKR dipped roughly 0.9%.
Scrutiny Following a Major Loan Sale
Blue Owl remains under investor scrutiny following a significant transaction in February. The firm sold $1.4 billion in loans from three of its funds, returning a portion of the capital to investors, using some to pay down debt, and adjusting the distribution mechanism for its Blue Owl Capital Corp II fund. The company reported the loans were sold at 99.7% of their face value, which it cited as evidence supporting the accuracy of its internal valuations. Co-President Craig Packer emphasized the move was not about "halting redemptions," but rather a strategic shift in managing liquidity.
This transaction elicited divergent views from analysts. Some, like Truist's Brian Finneran, interpreted the sale as a signal that investor withdrawal requests had accelerated. Conversely, Oppenheimer's Mitchel Penn argued the ability to sell assets at the firm's own marks demonstrated Blue Owl could unlock liquidity even in a difficult market environment, noting that "nobody is getting a break" in the current climate.
Underlying Risks Remain
Potential risks for the sector persist. If redemption requests continue to climb at semi-liquid funds—which inherently limit investor withdrawals and hold portfolios of illiquid loans—fresh pressure on asset valuations, fundraising pipelines, and credit lines could emerge. Deteriorating performance among software-backed borrowers could exacerbate these pressures. According to recent data, U.S. banks held approximately $925 billion in exposure to private credit and private equity as of June 2025, including unused commitments.
Blue Owl manages over $307 billion across credit, real assets, and GP Strategic Capital platforms, according to its investor website. Even with the supportive analysis from Bank of America on Thursday, its stock price continued to hover near the $9 level, reflecting the ongoing cautious sentiment in the market.
