Blue Owl's NAV Per Share Drops to $14.26

Blue Owl ($OWL), a business development company (BDC), reported a decline in its second-quarter net asset value (NAV) per share to $14.26, reigniting controversies surrounding the valuation of private loan markets. The debate, which began with concerns over individual loan impairments, has now expanded to issues of pricing reliability for private debt securities.

Blue Owl Capital Corporation ($OBDC) disclosed in its second-quarter earnings report submitted to the U.S. Securities and Exchange Commission (SEC) on August 5 that the NAV per share as of June 30 was $14.26, down from $14.41 in the previous quarter. The company explained that impairments in a few securities had an impact, while share buybacks and excess dividend income acted as partial offsets.

According to the same report, the proportion of non-performing loans in the second quarter was 2.8% based on cost and 0.8% based on fair value. Non-performing loans refer to loans where interest payments are not being made as scheduled. The company stated that it repurchased approximately $35 million (about 47.2 billion KRW) worth of common stock during the quarter, with new investment commitments in the second quarter amounting to $319 million (about 430.3 billion KRW) and recoveries and repayments totaling $747 million (about 1 trillion 77 billion KRW).

The controversy has persisted since March of this year. Glendon Capital raised concerns that private loan managers, including Blue Owl, were not adequately reflecting loss rates. They pointed out that some junior tranche valuations were higher than the publicly traded prices of senior bonds from the same borrowers.

A spokesperson for Blue Owl countered that simply comparing public trading prices to valuations as of December 31, 2025, was inaccurate. They added that adjusting asset valuations at the end of the quarter is the industry standard. The dispute has expanded beyond specific asset valuations to encompass broader pricing practices in private lending.

Private loans are not assets that have daily market prices. Managers often use models and internal benchmarks to determine book values. As a result, when redemption requests increase or questions arise about loans in specific sectors, investors first consider the gap between book values and actual recoverable values.

In its Q1 10-Q, Blue Owl noted that some non-public BDCs experienced a slowdown in capital inflows and an increase in redemption requests. At the same time, they reported new capital commitments of $11 billion (about 14.839 trillion KRW) in Q1 and $56.6 billion (about 76.353 trillion KRW) over the past 12 months. This indicates a simultaneous emergence of funding capacity and redemption pressure from existing investors.

As of the end of July, Blue Owl's assets under management were reported to be $319 billion (about 430.331 trillion KRW). Reuters reported that while there were outflows in Blue Owl's credit business, other sectors such as data centers and real estate were growing. Company executives stated during a conference call that the credit quality of their direct lending strategy remains strong.

In its mid-2026 outlook document, Blue Owl noted that the default rate for direct lending is approximately 2.0%, lower than the historical average of 2.7%. They also explained that market interest is focused on the impact of artificial intelligence (AI) on software and technology company valuations. The company maintains that credit quality is robust.

External evaluations are more cautious. Concerns about redemption restrictions, NAV discounts for non-public BDCs, and software exposure have emerged simultaneously, leading private loan investors to scrutinize valuation methods more rigorously. The analysis suggests that the less frequently traded an asset is, the more trust in valuation models translates into liquidity confidence.

Blue Owl's fundraising efforts continued. Blue Owl Technology Finance Corp. announced on September 4 that it completed the issuance of $150 million (about 2.024 billion KRW) in 7.60% senior unsecured bonds. The company stated that its portfolio remains strong and that it is receiving support from bond investors and banking partners.

This issue is also connected to the recent trend of BDC bond issuance resumption reported earlier. At that time, maturities, interest rates, and spreads were formed differently within the same BDC sector, and investors evaluated issuers based on their size and portfolios.

The connection to the crypto market lies in the tokenization of credit assets and the NAV calculation methods. We previously reported that when tokenized funds are used as collateral for loans, not only the token price but also the valuation of underlying assets, redemption conditions, and oracle calculation methods are subject to review. The trust issues surrounding the book values of non-public debt securities could lead to similar questions in the on-chain collateral market.

The key points confirmed through public disclosures in this controversy are the decline in OBDC's NAV, impairments in a few securities, an increase in redemption requests from some non-public BDCs, and the continued bond procurement by Blue Owl affiliates. The specific names of certain loans and the valuation figure of 'almost 0' are not confirmed in public disclosures.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.