Private credit faces strain as Blue Owl and others report losses

Private credit, once a fast-growing sector, has begun to show strains as investors grow wary. Blue Owl Capital's shares have lost more than half their value over the past year and investors have been pulling money from funds the firm manages. Apollo Global Management and BlackRock also rattled markets with write-downs on large loans to troubled e-commerce companies.

Concerns have centered on defaults at software companies and the effects of artificial intelligence on that sector. Software firms have received roughly 20 percent of loans made by private credit funds, and analysts at Barclays and UBS warned about the risk of increased losses; publicly traded software firms have lost roughly one-fifth of their value this year and loan prices that trade have dropped.

The industry’s opacity has heightened investor anxiety because many borrowers are private and lenders update valuations only quarterly.

private credit, blue owl capital, apollo global management, blackrock, e-commerce companies, software firms, artificial intelligence, barclays, ubs, loan prices