Barclays Downgrades Blue Owl, Upgrades StepStone Amid AI Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 02 2026
0mins
Source: seekingalpha
- Rating Changes: Barclays downgraded Blue Owl Capital (OWL) to Equalweight from Overweight while upgrading StepStone Group (STEP) to Overweight from Equalweight, reflecting concerns about the impact of AI fears on the private credit market, particularly on business development companies.
- Slowing Inflows: Blue Owl's largest fund, OCIC, saw inflows decrease from approximately $600 million per month in November to $208 million in February, indicating a growing dependency on non-traded BDCs, which may lead to increased outflows in the future.
- Redemption Pressure: Blue Owl experienced quarterly redemptions exceeding 5% of net asset value in Q4, translating to over $1 billion in outflows, with analysts suggesting that this trend could worsen due to software and AI-related concerns.
- Market Opportunity for StepStone: StepStone has outperformed expectations in the wealth channel and is significantly less exposed to non-traded BDCs compared to peers, leading analysts to view this as an attractive entry point, with expectations for stable inflows into its wealth products.
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Analyst Views on OWL
Wall Street analysts forecast OWL stock price to rise
15 Analyst Rating
12 Buy
3 Hold
0 Sell
Strong Buy
Current: 9.730
Low
18.00
Averages
21.13
High
28.00
Current: 9.730
Low
18.00
Averages
21.13
High
28.00
About OWL
Blue Owl Capital Inc. is an alternative asset management company. The Company deploys private capital across Credit, GP Strategic Capital and Real Estate platforms on behalf of institutional and private wealth clients. Its product platforms include Credit, GP Strategic Capital and Real Estate. Its credit products offer private financing solutions primarily to upper-middle-market companies. Its credit products are offered through a mix of business development companies, long-dated private funds, managed accounts and collateralized loan obligations. It is focused on acquiring equity stakes in or providing debt financing to private capital firms. Its Real Estate products are focused on acquiring triple net lease real estate occupied by investment-grade or creditworthy tenants. Its Real Estate products are offered through Permanent Capital vehicles, including its real estate investment trusts, and long-dated private funds. It offers asset management services to the insurance industry.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Diverse Risk Premiums Assigned to U.S. Private Credit Firms
- Risk Premium Disparity: A Reuters analysis reveals that U.S. private credit firms are facing diverse risk premiums, with smaller lenders priced at greater risk, indicating a growing selectivity in a market under borrower stress.
- Spread Data: BCP Investment Corp recorded the highest weighted average option-adjusted spread (OAS) at 680 basis points, followed by Prospect Capital Corp at 449 bps, highlighting market concerns over varying credit quality among firms.
- Market Selectivity: The widening of spreads this year reflects investors' increasing differentiation of BDCs exposed to AI disruptions in SaaS companies, signaling a heightened focus on credit quality and funding risks.
- Rising Default Rates: Fitch Ratings reports that the default rate among U.S. private credit borrowers reached 6% over the past 12 months, the highest since August 2024, indicating a weakening backdrop for the private credit market.
See More
Institutional Investors Return to Private Credit Market
- Investor Position Changes: As of March 31, 2026, 11.5% of over 6,000 institutional investors increased their holdings in 45 publicly traded private credit funds, indicating a resurgence of interest in the sector, while only 3.2% reduced their stakes, reflecting a recovery in market confidence.
- New Investors Entering: In the first quarter, 279 institutional investors initiated new positions in private credit, suggesting that after a series of high-profile bankruptcies, institutions are rekindling their interest in direct lending, potentially laying the groundwork for future market growth.
- Declining Returns: Despite KKR and Blue Owl's credit strategies turning negative, Apollo's direct lending funds returned only 0.5% in the first quarter, significantly lower than the 8.5% over the past 12 months, indicating that the market environment remains challenging.
- Restored Market Confidence: KKR's co-CEO Scott Nuttall noted a recent uptick in institutional interest in direct lending, as they perceive an improving risk-reward ratio on new deals, signaling a gradual restoration of confidence in the market.
See More
Blue Owl Capital to Present at Strategic Decisions Conference
- Presentation Schedule: Blue Owl Capital's co-CEO Marc Lipschultz will present at the 42nd Annual Bernstein Strategic Decisions Conference on May 29, 2026, at 10 AM ET, highlighting the company's strategic direction in asset management.
- Live Webcast Availability: The presentation will be broadcast live on the Shareholders section of Blue Owl's website, ensuring that investors unable to listen live can access a replay shortly after the event, promoting transparency and information dissemination.
- Asset Management Scale: As of March 31, 2026, Blue Owl manages $315 billion in assets, demonstrating its robust investment capabilities across multi-strategy platforms including Credit, Real Assets, and GP Strategic Capital.
- Commitment to Long-Term Growth: Blue Owl is dedicated to providing businesses with private capital solutions to drive long-term growth while offering differentiated alternative investment opportunities to institutional and individual investors, aiming for strong performance and capital preservation.
See More
Investigation Alerts for Multiple Company Mergers
- KalVista Merger Investigation: KalVista Pharmaceuticals is set to be acquired by Chiesi Group for $27.00 per share, implying a total value of approximately $1.9 billion, with investigations focusing on whether the board breached fiduciary duties by failing to conduct a fair process.
- Thermon Acquisition Review: Thermon Group Holdings will be acquired by CECO Environmental in a deal valued at around $2.2 billion, allowing shareholders to choose between cash and stock, with investigations into potential breaches of fiduciary duties by the board regarding fair treatment of shareholders.
- Sila Realty Acquisition Inquiry: Sila Realty Trust is to be acquired by Blue Owl Capital for $30.38 per share, totaling approximately $2.4 billion, with investigations examining whether the board failed to ensure a fair process and fair value for shareholders.
- Lisata Therapeutics Merger Scrutiny: Lisata Therapeutics will be acquired by Kuva Labs for $4.00 per share plus contingent value rights, with investigations into whether the board breached fiduciary duties by not ensuring fair value in the transaction for shareholders.
See More
Blue Owl Credit Fund Sees 95% Drop in New Investments
- Investment Plunge: According to regulatory filings, Blue Owl's Credit Income Fund (OCIC) accepted only $26.4 million in subscription payments on May 1, marking a staggering 95% drop from $480 million at the same time last year, indicating a significant loss of confidence among retail investors.
- Portfolio Valuation: Blue Owl currently values OCIC's portfolio at approximately $34 billion, and despite the large asset base, the sharp decline in new investments could adversely affect its future liquidity and profitability.
- Investor Withdrawal Trend: Recently, wealthy investors have queued up to withdraw their investments from private credit vehicles, primarily due to concerns over weakening lending standards and fears that artificial intelligence could severely disrupt the software industry, a sector where many funds have substantial exposure.
- Structure and Financing Model: OCIC is structured as a business development company that raises equity and pairs it with leverage to finance loans primarily to mid-sized companies, but the current market environment may force it to reassess its financing strategies in light of declining investor confidence.
See More
Federal Reserve: Private Credit Risks Manageable
- Financial System Risk Assessment: The Federal Reserve's latest report indicates that risks from private credit to the financial system are 'limited and manageable,' although credit availability for higher-risk borrowers may decrease due to redemptions and negative sentiment, impacting their financing costs and accessibility.
- Redemption Wave Impact: Following the cancellation of a merger by private credit lender Blue Owl Capital, investors have rushed to redeem their investments, heightening market concerns, particularly regarding the potential disruption of traditional software business models, which could lead to a surge in defaults among previously safe companies.
- Liquidity Risk Warning: The report highlights that some open-end bond and loan mutual funds face 'liquidity transformation risks' that could trigger asset fire sales during market downturns, even as overall loan default rates remain relatively low, demonstrating market resilience.
- Insurance Company Investment Trends: Over the past decade, life insurers have steadily increased their investments in risky and illiquid assets, contributing to the expansion of private credit, although the Fed notes that banks continue to increase loan commitments and outstanding amounts to private credit funds, reflecting normal risk management practices.
See More
Diverse Risk Premiums Assigned to U.S. Private Credit Firms
- Risk Premium Disparity: A Reuters analysis reveals that U.S. private credit firms are facing diverse risk premiums, with smaller lenders priced at greater risk, indicating a growing selectivity in a market under borrower stress.
- Spread Data: BCP Investment Corp recorded the highest weighted average option-adjusted spread (OAS) at 680 basis points, followed by Prospect Capital Corp at 449 bps, highlighting market concerns over varying credit quality among firms.
- Market Selectivity: The widening of spreads this year reflects investors' increasing differentiation of BDCs exposed to AI disruptions in SaaS companies, signaling a heightened focus on credit quality and funding risks.
- Rising Default Rates: Fitch Ratings reports that the default rate among U.S. private credit borrowers reached 6% over the past 12 months, the highest since August 2024, indicating a weakening backdrop for the private credit market.
See More
Institutional Investors Return to Private Credit Market
- Investor Position Changes: As of March 31, 2026, 11.5% of over 6,000 institutional investors increased their holdings in 45 publicly traded private credit funds, indicating a resurgence of interest in the sector, while only 3.2% reduced their stakes, reflecting a recovery in market confidence.
- New Investors Entering: In the first quarter, 279 institutional investors initiated new positions in private credit, suggesting that after a series of high-profile bankruptcies, institutions are rekindling their interest in direct lending, potentially laying the groundwork for future market growth.
- Declining Returns: Despite KKR and Blue Owl's credit strategies turning negative, Apollo's direct lending funds returned only 0.5% in the first quarter, significantly lower than the 8.5% over the past 12 months, indicating that the market environment remains challenging.
- Restored Market Confidence: KKR's co-CEO Scott Nuttall noted a recent uptick in institutional interest in direct lending, as they perceive an improving risk-reward ratio on new deals, signaling a gradual restoration of confidence in the market.
See More
Blue Owl Capital to Present at Strategic Decisions Conference
- Presentation Schedule: Blue Owl Capital's co-CEO Marc Lipschultz will present at the 42nd Annual Bernstein Strategic Decisions Conference on May 29, 2026, at 10 AM ET, highlighting the company's strategic direction in asset management.
- Live Webcast Availability: The presentation will be broadcast live on the Shareholders section of Blue Owl's website, ensuring that investors unable to listen live can access a replay shortly after the event, promoting transparency and information dissemination.
- Asset Management Scale: As of March 31, 2026, Blue Owl manages $315 billion in assets, demonstrating its robust investment capabilities across multi-strategy platforms including Credit, Real Assets, and GP Strategic Capital.
- Commitment to Long-Term Growth: Blue Owl is dedicated to providing businesses with private capital solutions to drive long-term growth while offering differentiated alternative investment opportunities to institutional and individual investors, aiming for strong performance and capital preservation.
See More
Investigation Alerts for Multiple Company Mergers
- KalVista Merger Investigation: KalVista Pharmaceuticals is set to be acquired by Chiesi Group for $27.00 per share, implying a total value of approximately $1.9 billion, with investigations focusing on whether the board breached fiduciary duties by failing to conduct a fair process.
- Thermon Acquisition Review: Thermon Group Holdings will be acquired by CECO Environmental in a deal valued at around $2.2 billion, allowing shareholders to choose between cash and stock, with investigations into potential breaches of fiduciary duties by the board regarding fair treatment of shareholders.
- Sila Realty Acquisition Inquiry: Sila Realty Trust is to be acquired by Blue Owl Capital for $30.38 per share, totaling approximately $2.4 billion, with investigations examining whether the board failed to ensure a fair process and fair value for shareholders.
- Lisata Therapeutics Merger Scrutiny: Lisata Therapeutics will be acquired by Kuva Labs for $4.00 per share plus contingent value rights, with investigations into whether the board breached fiduciary duties by not ensuring fair value in the transaction for shareholders.
See More
Blue Owl Credit Fund Sees 95% Drop in New Investments
- Investment Plunge: According to regulatory filings, Blue Owl's Credit Income Fund (OCIC) accepted only $26.4 million in subscription payments on May 1, marking a staggering 95% drop from $480 million at the same time last year, indicating a significant loss of confidence among retail investors.
- Portfolio Valuation: Blue Owl currently values OCIC's portfolio at approximately $34 billion, and despite the large asset base, the sharp decline in new investments could adversely affect its future liquidity and profitability.
- Investor Withdrawal Trend: Recently, wealthy investors have queued up to withdraw their investments from private credit vehicles, primarily due to concerns over weakening lending standards and fears that artificial intelligence could severely disrupt the software industry, a sector where many funds have substantial exposure.
- Structure and Financing Model: OCIC is structured as a business development company that raises equity and pairs it with leverage to finance loans primarily to mid-sized companies, but the current market environment may force it to reassess its financing strategies in light of declining investor confidence.
See More
Federal Reserve: Private Credit Risks Manageable
- Financial System Risk Assessment: The Federal Reserve's latest report indicates that risks from private credit to the financial system are 'limited and manageable,' although credit availability for higher-risk borrowers may decrease due to redemptions and negative sentiment, impacting their financing costs and accessibility.
- Redemption Wave Impact: Following the cancellation of a merger by private credit lender Blue Owl Capital, investors have rushed to redeem their investments, heightening market concerns, particularly regarding the potential disruption of traditional software business models, which could lead to a surge in defaults among previously safe companies.
- Liquidity Risk Warning: The report highlights that some open-end bond and loan mutual funds face 'liquidity transformation risks' that could trigger asset fire sales during market downturns, even as overall loan default rates remain relatively low, demonstrating market resilience.
- Insurance Company Investment Trends: Over the past decade, life insurers have steadily increased their investments in risky and illiquid assets, contributing to the expansion of private credit, although the Fed notes that banks continue to increase loan commitments and outstanding amounts to private credit funds, reflecting normal risk management practices.
See More
