Hua Er Jie Jian Wen·2025-11-21 02:20Core Insights - The focus on Nvidia and Oracle's credit default swaps may overlook significant risks in the private credit market, particularly with Blue Owl and Capital One [1][7] - Blue Owl's recent decision to cancel the merger of two private credit funds has led to a sharp decline in its stock price, reaching a low for 2023 [1][3] - The private credit market, valued at $1.7 trillion, is showing signs of deep cracks, with liquidity pressures emerging as redemption requests surge [2][4] Company-Specific Developments - Blue Owl's plan to merge its $1.8 billion non-traded business development company with the publicly traded Blue Owl Capital Corp. was halted due to investor concerns over potential losses of up to 20% [3][4] - Following the merger announcement, Blue Owl's stock faced significant selling pressure, contributing to a year-to-date decline of approximately 22% for its parent company [3][6] - The company is considering various options, including independent listing or asset sales, to address liquidity challenges and potential redemption limits [4][6] Industry Context - The private credit market is experiencing increased scrutiny as liquidity pressures mount, with redemption requests exceeding preset limits [2][4] - High-profile warnings from industry leaders, such as Jamie Dimon and Jeffrey Gundlach, highlight concerns over deteriorating underwriting standards and the presence of "junk loans" in the sector [2][6] - The current market turmoil suggests that private credit may be the weakest link in financing the anticipated $1.5 trillion funding gap for AI infrastructure over the coming years [7]