Blue Owl Capital Inc. Permanently halted redemptions from its $1.7 billion retail-focused private credit fund, Blue Owl Capital Corporation II (OBDC II), on February 19, 2026, triggering a sell-off in the shares of the firm and raising concerns about the broader $1.8 trillion private credit market.
The decision to block investor withdrawals, after selling $1.4 billion in direct lending investments to North American pension and insurance investors at 99.7% of par value, marks a significant escalation of anxieties surrounding the sector. Blue Owl’s co-President, Craig Packer, characterized the move not as a halt to redemptions, but as an acceleration, noting the firm had previously tendered for 5% of the fund’s shares each quarter. “Instead of resuming 5% a quarter, we are in fact accelerating redemptions,” Packer stated during an earnings call.
The move comes after investors pulled more than 15% of net assets from one of Blue Owl’s tech-focused funds in recent weeks, according to statements made by Marc Lipschultz, Blue Owl’s co-chief, to analysts on February 23, 2026. Lipschultz described the investor reaction as a familiar pattern following events like the COVID-19 pandemic, the collapse of Silicon Valley Bank, and Liberation Day, but acknowledged the current situation feels different.
The ramifications of Blue Owl’s actions extended beyond its own stock price, which reached a two-and-a-half-year low on Thursday. Shares of Apollo, Blackstone, KKR, Ares, and TPG also declined as the industry grapples with questions about liquidity in “semi-liquid” private credit funds. Orlando Gemes, chief investment officer of Fourier Asset Management, drew parallels to the 2008 financial crisis, citing “worsening lender protections and convoluted liquidity terms that obscure the mismatch between what investors believe they own and what they can actually exit.”
The fund at the center of the turmoil, OBDC II, had previously called off a merger with a larger publicly traded credit fund managed by Blue Owl, a detail that underscores the complexities within the firm’s structure. Blue Owl’s decision specifically impacts retail investors, a segment increasingly drawn to private credit offerings. The fund was designed for high net worth individuals, rather than institutional investors like pension funds.
The asset sales included a $600 million portion, roughly 34% of OBDC II’s portfolio. Following the sale, Blue Owl announced that OBDC II would transition to periodic payouts funded by asset sales, earnings, repayments, and other strategic deals, rather than regular quarterly liquidity payments.
