Blue Owl caps two private credit funds again as redemption requests climb

Blue Owl Capital again limited redemptions from two of its private credit funds at 5 percent, after withdrawal requests of 39 percent and 17 percent, as fears around artificial intelligence kept requests elevated¹. The Wall Street Journal reported that the two funds saw redemption requests well above the 5 percent threshold, and that private credit funds generally have seen a rise in redemptions².

The sources disagree on the direction of travel. Reuters reported that withdrawal requests at Blue Owl’s flagship private credit fund slowed further in the third quarter, according to shareholder letters, and framed the quarter as private credit turmoil easing^3,4. Bloomberg, reporting the same day, recorded fresh caps at two other vehicles¹. XTB described the market as showing the first signs of catching its breath after being one of the main sources of investor concern for most of this year⁶.

Why it matters to investors

Gating is spreading beyond credit. The Financial Times reported that Partners Group split its flagship private equity fund as clients demanded cash, that the firm backs gating as private credit redemptions test liquidity, and that it has sounded an alarm on private credit default rates⁵.

Regulators outside the United States are now asking for exposure data directly. The Australian Prudential Regulation Authority demanded that super fund giants detail their exposure to the troubles at private credit lender Metrics⁷. Insignia Financial, the owner of MLC, has about $5.4 billion invested in that lender, and Rest Super about $1.2 billion⁷.

What to watch

The official read is still benign. Federal Reserve Governor Lisa Cook said that private credit so far does not pose an adverse risk to financial stability, while noting the potential risks⁸.

Three things would change that assessment. The first is whether caps keep recurring at the same vehicles rather than clearing, since Blue Owl has now limited the same two funds again¹. The second is whether the flagship’s slowing outflows hold up in the next set of shareholder letters³. The third is whether gating spreads further into private equity structures of the kind Partners Group has just split⁵.

XTB’s reading, that the market is catching its breath, rests on the flagship fund’s figures rather than on the two capped vehicles, which is the same split visible between the Reuters and Bloomberg accounts^1,3,6.