Blue Owl slashes loan value to near zero, raising doubts in private credit market

When a firm managing roughly $315 billion in assets quietly marks a loan down to nearly zero, it tends to get people’s attention. Blue Owl Capital’s latest write-down is doing exactly that, putting a spotlight on valuation practices across a private credit market that has ballooned to $1.8 trillion and now faces uncomfortable questions about whether its marks reflect reality. The valuation gap no one can ignore Earlier in 2026, hedge fund Glendon Capital Management flagged what it called inconsistencies in Blue Owl’s valuations. The core issue: Blue Owl’s OBDC fund was carrying roughly $235 million in junior preferred stock and second-lien debt at around 90 cents on the dollar by the end of 2025, while the senior debt for the same borrowers was trading at approximately 78 cents. Junior debt, by definition, gets paid after senior debt in any restructuring or default. If the market prices the safer senior claims at 78 cents, marking the riskier junior claims at 90 cents requires some creative reasoning. In February 2026, the firm sold $1.4 billion in loans from its BDC funds at an average of 99.7 cents on the dollar, suggesting that at least a significant chunk of the portfolio is wo...