Private Credit Lender Blue Owl Alters Withdrawal Rules, Sparking Concerns

Steep declines in shares of private lenders raise worries about potential trouble ahead in the sector

Published on Feb. 28, 2026

Got story updates? Submit your updates here. ›

Anxiety about the private credit industry is growing following a strategic change from Blue Owl Capital, a major lender that had aggressively lent to software companies now being disrupted by AI. Blue Owl altered how investors in one of its prominent funds can withdraw their money, sparking concerns that this could be a "canary in the coal mine" for broader issues in the lightly regulated private credit sector.

Why it matters

Private credit has soared in popularity in recent years, but skeptics have warned that the sector could face big losses if an economic downturn reveals that lenders had overextended themselves with bad loans. The Blue Owl fund change has raised worries that a potential reckoning may be starting for private credit, which has attracted increasing amounts of retail investor money.

The details

Blue Owl said it would now decide how much investors can take back from one of its funds every quarter, rather than letting them redeem a set amount. This sparked a sell-off in shares of private credit giants like Apollo, Ares and Blackstone. Defenders say Blue Owl's move was a proactive step, with the firm disclosing it had sold $1.4 billion worth of loans from three funds with virtually no loss. But others, like Verdad founder Dan Rasmussen, predict "the private markets bubble is finally starting to burst."

  • On Thursday, shares in private credit lenders were shellacked after Blue Owl's announcement.
  • Blue Owl's shares remain under pressure in premarket trading on Friday.

The players

Blue Owl Capital

A major private credit lender that had aggressively lent to software companies now being disrupted by artificial intelligence.

Mohamed El-Erian

The former CEO of Pimco, who used the "canary in the coal mine" metaphor to describe the Blue Owl fund changes.

Dan Rasmussen

The founder of investment firm Verdad, who predicted to CNBC that "the private markets bubble is finally starting to burst."

Craig Packer

A Blue Owl co-president, who said the firm was receiving "congratulations from everyone in our industry" about its loan sale.

Bill Katz

An analyst at TD Cowen, who wrote that Blue Owl's loan sale transaction suggested "there are no 'cockroaches' lurking in the portfolio."

Got photos? Submit your photos here. ›

What they’re saying

“I'm getting congratulations from everyone in our industry.”

— Craig Packer, Blue Owl co-president (The New York Times)

“The private markets bubble is finally starting to burst.”

— Dan Rasmussen, Founder, Verdad (CNBC)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.