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Blue Owl Notes Plummet Amid Withdrawal Halt
20 Feb
Summary
- Blue Owl Capital notes are trading at significantly reduced values.
- Withdrawal restrictions imposed on a retail-focused private fund triggered concerns.
- The asset manager's stock has experienced a notable decline this year.
Structured notes linked to Blue Owl Capital Inc. are experiencing significant devaluation, with at least one security trading at a mere 47 cents on the dollar. This sharp decline follows the asset manager's decision to restrict withdrawals from a retail-focused private fund. The affected security, issued by a Citigroup Inc. subsidiary, matures later this year.
Further indicating market unease, another note from a JPMorgan Chase & Co. unit due in 2028 is quoted at approximately 68 cents. A Bank of Nova Scotia instrument also tied to Blue Owl was valued at 87 cents, according to Bloomberg data. Structured notes, which are bonds with embedded derivatives, typically lack a robust secondary market, with pricing originating from the arranging banks.
Blue Owl's stock reacted negatively, falling as much as 9.4% in New York trading on Thursday. These depressed note prices highlight the mounting pressure on Blue Owl, whose shares have already depreciated by roughly 25% this year. The withdrawal limitations signal a reversal from a prior plan to resume redemptions this quarter, intensifying concerns within the private credit sector.
