Blue Owl’s bargain-bin tender offer flops

The “buy pessimism” pitch... didn’t land

Boaz Weinstein called it “buying pessimism.” Investors, apparently, called it “nah.”

A tender offer aimed at Blue Owl Capital Corp. II shares pulled in less than 1% participation, according to Bloomberg. The buyers — Saba Capital Management and Cox Capital Partners — had hoped to snap up the non-traded BDC stakes at a markdown of more than 20% to the most recent estimated net asset value and dividend reinvestment price.

Why this matters for your portfolio

This wasn’t just some niche fund drama. It’s another little stress test for the private credit world, where investors have been getting increasingly skittish about:

• default risk
• higher-for-longer interest rates
• AI’s potential to rattle software-heavy borrowers

And when the broader mood gets ugly, redemption requests tend to pile up fast.

Blue Owl is feeling the heat too

Blue Owl already capped redemptions at 5% in both of its funds earlier this month after investors asked to withdraw 22% and 41% of their money from the private credit and tech-focused funds, respectively. Translation: the cash isn’t exactly stampeding for the exit — but it is knocking on the door.

Blue Owl had urged investors to reject the tender because, in its view, the price was too low. Investors seemed to agree, which is a weirdly optimistic sign for the shares, even if the broader sector still looks like it’s riding the market equivalent of a bumpy school bus road.

Big picture

The tender’s failure suggests holders would rather sit tight than lock in a discount, even amid all the private-credit hand-wringing. For OWL, that could be a vote of confidence — or just proof that nobody likes selling cheap.