Moody’s Ratings has downgraded the outlook for one of Blue Owl Capital’s private credit funds from stable to negative after it received higher redemption requests than its peers.
The ratings agency revised the outlook for Blue Owl Credit Income Corp (OCIC), a perpetually non-traded business development company (BDC) focused on private credit investing.
Moody’s said that while the BDC retains its Baa2 rating, the outlook has been changed “in response to OCIC’s significantly higher-than-peer redemption requests in the first quarter”.
A recent filing showed shareholders in the OCIC fund asked to withdraw 21.9 per cent of shares in the three months to 31 March. Blue Owl said the increased redemption requests reflect “heightened negative sentiment” towards direct lending.
Blue Owl has capped redemptions from the fund at the five per cent tender offer threshold.
Moody’s also said it views the level of equity holder concentration in the fund “negatively”, after Blue Owl stated that the majority of redemptions came from a very limited number of investors.
The ratings agency added that despite Blue Owl honouring redemptions of five per cent, it now expects elevated redemption requests to persist in coming quarters, while inflows could slow further from already reduced levels.
“As a result, OCIC’s currently strong capital and liquidity positions, which are relative credit strengths, could begin to dissipate as the company contends with net outflows over the outlook period,” Moody’s said.
However, Moody’s noted that Blue Owl’s asset quality remains solid and is supported by earnings performance. For example, non-accruals were only 0.6 per cent of debt investments at cost as of 31 December 2025, among the lowest of rated peers.
OCIC also reported net debt-to-equity leverage of 0.8x, below the peer median for rated business development companies, and around $11bn (£7.3bn) in cash.
The news comes as Blue Owl has faced pressure across its BDCs. The firm recently changed the redemption structure of Blue Owl Capital Corporation II, switching from quarterly tender offers to quarterly return-of-capital distributions. This meant that shareholders can no longer request additional redemptions due to high levels of withdrawal requests.
Blue Owl’s funds are not alone in facing rising redemption pressure. Other major private credit managers, including Blackstone, Ares and KKR, have also seen increased redemption requests.
