Blue Owl Capital, once the hottest name in private credit, disclosed record investor withdrawals as confidence in its loan quality deteriorates. The firm revealed that 41% of investors in a $6 billion fund are seeking to pull their money, while another $36 billion fund faces redemptions from 22% of its investors.

Blue Owl announced it would immediately fulfill only 5% of these requests, with the remainder taking years to pay out. Executives blamed external factors including "A.I.-related disruption to software companies" for the troubles, though similar firms have indicated they would pay out more than the minimal amount Blue Owl proposed. The firm cited fund legal documents permitting delays and suggested it might borrow money or sell investments to meet future redemptions.

The market reacted swiftly to the news, sending Blue Owl's stock to its lowest ever level as a public company. Founded by Goldman Sachs veterans, Blue Owl's troubles reflect growing concerns about the private credit industry, which has so far been supported by low interest rates but now faces investor skepticism about the quality of its loans and the industry's overall sustainability.