On Thursday, July 2, 2026, Blue Owl Capital told shareholders in two investor letters that it would again cap quarterly withdrawals at 5% from its two largest private credit funds, after clients asked to pull far more cash than the funds would release. The letters, signed by Blue Owl co-president Craig Packer and fund president Logan Nicholson, marked the second straight quarter that the firm’s flagship credit funds drew the heaviest exit requests in the industry.

Across the wider market, the numbers are stark. Investors sought to withdraw billions from non-traded private credit funds in the second quarter, and because most vehicles limit redemptions to 5% of net assets each quarter, roughly $14 billion of investor money is now stuck behind those limits, according to data from Robert A. Stanger & Co. The private credit market these funds sit inside is worth about $1.8 trillion.

Here is how the cap works. When a fund lets only 5% of shares out but 17% of investors want to leave, everyone who asked gets paid a slice — roughly 29 cents for every dollar requested — and has to line up again next quarter. There is no guarantee the rest gets paid if the exit requests stay high.

At Blue Owl, investors in the roughly $34 billion Blue Owl Credit Income Corp., one of the largest funds of its kind, asked to pull 18.8% of their shares, or about $3.6 billion, in the second quarter. That was down from $4.2 billion three months earlier. The firm’s smaller Blue Owl Technology Income Corp. saw requests for 38.1% of shares, or about $1.1 billion. Together the two funds faced $4.7 billion in withdrawal requests, below the $5.3 billion they saw in the first quarter.

Packer and Nicholson told investors the flagship fund was in no danger of a forced sale. “OCIC does not need to sell a single private loan to satisfy the tender offer,” they wrote, noting that 90% of the fund’s investors chose to stay and that the fund has taken in $1.2 billion of new money this year.

Blue Owl was not alone. Blackstone capped withdrawals at 5% on its $79 billion Blackstone Private Credit Fund after requests reached 10%. Cliffwater limited its $33 billion Cliffwater Corporate Lending Fund to 5% after investors asked to redeem about 17% of shares, tightening from a 7% cap a quarter earlier. Apollo Global Management capped its $26 billion Apollo Debt Solutions fund at 5% after requests hit nearly 17%, or $2.4 billion. In Europe, Switzerland’s Partners Group restricted its $8.6 billion Global Value fund to 5%, though it said it honored every request in full and still pulled in $275 million of fresh money.

What is driving the exits is fear, not yet losses. Private credit funds are big lenders to software companies, which make up roughly a quarter of these portfolios, and investors worry that artificial intelligence tools that write their own code will eat into those borrowers’ revenue. Fund managers say the loans themselves are still performing. Blue Owl told investors there is a “meaningful disconnect” between the public alarm over private credit and what it sees inside its own book.

The money at stake belongs largely to wealthy individuals who bought into so-called semi-liquid funds over the past few years, drawn by higher yields than they could get in public markets in exchange for giving up easy access to their cash. Many are now learning that the “semi” in semi-liquid does real work. Some of the current wave, managers say, is simply backlogged demand from investors who were blocked by caps in the prior quarter and are trying again.

For the firms that run these funds, the stakes are their share prices and their standing with the wealth-management channel that feeds them new clients. Blue Owl stock has fallen about 56% over the past year, though it rose roughly 6% after Thursday’s letters suggested the redemption wave may be easing — the combined $4.7 billion in requests came in below the prior quarter. Blackstone, Ares Management, KKR and Apollo shares all fell sharply in early June as the caps piled up.

Whether the pressure fades or feeds on itself is the open question. Goldman Sachs has projected that private credit funds could shrink by $45 billion to $70 billion over the next two years if retail investors keep pulling out. For now, the funds are holding the line at 5%, betting that steady loan payments and slowing requests will outlast the storm.

JBizNews Desk | New York
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