April 7 (Reuters) – Moody’s Ratings on Tuesday cut its outlook on a $36 billion Blue Owl fund to negative from stable, citing redemption requests that were “significantly higher” than peers in the first quarter.
The action marks the latest response by a ratings agency on funds in a private credit market stung by redemption waves. Jitters have spilled onto Wall Street, with several funds capping withdrawals and some major U.S. banks tightening lending to the $2 trillion industry.
Moody’s said the change in outlook on Blue Owl Credit Income Corp (OCIC), one of Blue Owl’s larger funds, is also due to the majority of the redemptions requested being from a very limited number of investors, revealing some concentration in the equity holder base.
Last week, the private credit firm said it is limiting withdrawals from two of its funds after receiving a historic level of redemption requests in the first quarter. Investors asked to withdraw an unspecified 21.9% of their OCIC shares, but the firm said it plans to fulfill only 5% of the requests.
Moody’s said the company’s decision to honor redemptions only for 5% of shares would keep net outflows contained in the first quarter, but expects elevated redemptions to persist in the coming quarters and inflows to slow further, resulting in the dissipation of OCIC’s currently strong capital and liquidity positions.
Blue Owl did not immediately respond to a request for comment outside regular business hours.
Earlier on Tuesday, Moody’s revised its outlook on U.S. business development companies (BDCs) to negative from stable, citing rising redemption pressures, higher leverage, and weakening access to funding markets.
In March, S&P Global revised the outlook on Cliffwater LLC’s $33 billion flagship private credit fund to negative from over higher investor redemption requests.
(Reporting by Gursimran Kaur in Bengaluru; Editing by Anil D’Silva and Rashmi Aich)
