Blue Owl’s Woes Expose Private Credit Risks for Retail Investors

For years, private credit funds trumpeted a key distinction from other corners of finance: insulation from liquidity mismatches.

Because investors typically commit capital for long, fixed periods, and the funds deploy that money into loans with similarly lengthy maturities, the risk of being forced to sell assets at cut-price rates to meet demands for liquidity is minimized. At least, that’s the theory.

But recent strains within Blue Owl Capital Inc.’s business development companies suggest the industry may not be entirely shielded from that longstanding vulnerability.

The New York-based private credit giant has faced increasing withdrawal requests from investors in ...