Blue Owl Capital Restricts Withdrawals from Debt Funds, Triggering Wall Street Sell-Off

The American private debt market has come into focus following drastic decisions by Blue Owl Capital, which triggered a sell-off avalanche in asset manager stocks. The company announced restrictions on capital withdrawals from the Blue Owl Capital Corp II fund, aimed at retail investors. This decision, interpreted as a "gate closure" for liquidity, caused Blue Owl's share price to fall more than 36% since the beginning of 2025. Similar pressure has affected other sector giants such as Blackstone, Apollo Global Management, and KKR, whose shares lost several percent in recent days. Since the 2008 financial crisis, the private credit market has grown to $2 trillion, becoming a key alternative to bank financing but also raising regulatory concerns about a lack of transparency.The situation is exacerbated by growing skepticism about the profitability of software sector companies, which constitute a significant part of Blue Owl's portfolio. Investors fear that artificial intelligence could render the business models of many debtors obsolete, leading to a cycle of insolvency. In response to the crisis, the company managed to sell assets worth $1.4 billion to a consortium that included Canadian and Californian pension funds and its own insurance company, Kuvare. Despite management assurances that liquidity has not been completely halted, the market is reacting nervously to the shift from quarterly share buybacks to payouts dependent on asset sales. The crisis has attracted the attention of politicians in Washington. Senator Elizabeth Warren has called for tighter regulations and increased disclosure requirements for funds operating in the non-bank market. Analysts point out that Blue Owl's problems could be a "canary in the coal mine" for the entire sector of semi-liquid instruments, which were aggressively sold to less wealthy investors as a safe haven with a high rate of return.