Blue Owl Capital Corporation shares fell nearly 6% on Thursday, February 18, 2026, after the firm sold $1.4 billion in loan assets and permanently restricted withdrawals from its Blue Owl Capital Corporation II fund, a semi-liquid private credit vehicle marketed to U.S. Retail investors.
The move, which halts quarterly redemption options for investors in the fund, has ignited concerns about potential stress within the rapidly expanding private credit market. Blue Owl’s decision to limit withdrawals follows a broader trend of tightening liquidity in the sector, prompting warnings from industry analysts that the current environment could signal a turning point for the $3 trillion global private credit industry.
According to a statement released by Blue Owl, the asset sales were intended to return capital to investors and reduce the firm’s outstanding debt. The largest portion of the sale originated from Blue Owl Capital Corporation II. The company did not immediately respond to requests for further comment.
“This is a canary in the coal mine,” said Dan Rasmussen, founder and adviser at Verdad Capital, in a CNBC interview. “The private markets bubble is finally starting to burst.” Rasmussen cautioned that years of historically low interest rates and narrow yield spreads encouraged lenders to pursue riskier investments, financing smaller, highly leveraged companies at yields that appeared attractive relative to public markets.
The private credit market has experienced substantial growth in recent years, attracting increasing participation from retail investors through business development companies (BDCs). A Duke University study found that institutional ownership of BDC shares had declined to approximately 25% by 2023. This shift towards retail investment has raised concerns about the potential for increased volatility and liquidity issues, particularly as interest rates have begun to rise.
In 2025, the eight largest members of the S&P BDC Index offered dividend yields reaching up to 16%, with Blue Owl exceeding 11%. But, industry observers warn that these high yields are often associated with increased risk. Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, noted that individual investors are disproportionately exposed to high-yield loans, potentially leading to significant defaults during an economic downturn.
Concerns are growing specifically regarding borrowers in the software sector, who may be particularly vulnerable to disruption from emerging artificial intelligence technologies. The implications of these potential defaults remain unclear, but analysts suggest they could exacerbate existing liquidity pressures within the private credit market.
Blue Owl’s actions come as the private credit industry faces increased scrutiny from regulators and investors alike. The firm has not announced any further plans to restrict withdrawals from other funds, but the situation remains fluid. The company’s next earnings call is scheduled for March 15, 2026, where executives are expected to address investor concerns and provide further details on the company’s strategy.
