Blackstone, Blue Owl private credit vehicles tap strong demand for bond sales

Private credit funds from Blackstone and Blue Owl have experienced high demand in the investment-grade bond market, surpassing their initial targets, according to Bloomberg. Blackstone's BCRED fund expanded its $750 million five-year note offering from the original $500 million goal, receiving peak orders of about $2 billion. Blue Owl Technology Finance also widened its $400 million note offering, surpassing the initial $200 million target with investor orders totaling around $1.05 billion.

The Blue Owl notes were priced at a 2.5 percentage point spread over US Treasuries, which was tighter than the 2.65-point spread of the existing bonds. BCRED's debt was priced at a 2.05-point spread, slightly inside its initial price range. This surge in activity follows Barings Private Credit Corp.'s $350 million bond sale on August 13, marking only the second US high-grade note issuance from a BDC since mid-July.

During the first half of the year, BDCs collectively issued $16 billion in investment-grade bonds. The renewed issuance comes as private credit managers strive to maintain access to public debt markets while addressing investor concerns about software-related loans' valuations amid growing interest in artificial intelligence's impact on technology businesses.

Some private credit vehicles, including Blue Owl-managed funds, have faced increased redemption requests and introduced withdrawal limits. However, sector-wide second-quarter results have helped alleviate some of these concerns. Blue Owl Capital raised $750 million through a bond offering the previous week, with investor orders reaching $3.3 billion.

BCRED's latest transaction follows an $850 million bond sale in April, contributing to a record August month for high-grade bond sales in the US.