Blue Owl Capital (OWL) investors who dismissed the severity of the private credit redemption momentum might have more to lose. In the last year, OWL stock fell from over $22 to $16 to start 2026. Since January, sales have accelerated after the company limited redemptions.
Private credit management required limiting annual total redemptions by 5%. Firms like KKR (KKR) and Blackstone (BLK) need inflows of capital to fund commitments for existing and new investments. When panicking, investors rush to redeem their funds, which creates a liquidity crunch. KKR and Blackstone also reported redemption requests exceeding limits.
The Private credit crunch might trigger a great financial crisis. Though the magnitude of a GFC is not likely to match in size, investors must weigh the risks. The more that investors panic, the bigger the liquidity crisis it creates. The industry will need companies with ample liquidity to buy out firms that are constrained from enough fund flows
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Banks reportedly increased charges on loans provided to private credit funds. JPMorgan Chase revised the value of such loans in early March.
Your Takeaway
U.S. banks are unattractive holdings at this time. Look out for Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C) underperforming markets. Canadian banks like Bank of Montreal (BMO) and CIBC (CM) might outperform them. Santander (SAN) pulled back recently, as well. It is an attractive non-U.S. bank to consider.
