Blue Owl Capital limits withdrawals after investors try to redeem $5.4bn
A major private credit investment firm, Blue Owl Capital, has imposed a cap on withdrawals after investors tried to pull $5.4bn from two key funds, in the latest sign of crumbling confidence in the unregulated lending market.The New York-headquartered firm released filings on Thursday that showed a surge in redemption requests, with investors asking to take back 21.9% of the cash stored in Blue Owl’s $20bn (£15bn) Credit Income Corp fund between January and March.Meanwhile, investors requested 40.
7% of funds from its $3bn tech lending fund.It comes amid growing jitters over potentially risky loans arranged by private credit firms, which lend to companies using investor money outside the traditional regulated banking system and are seen as particularly exposed to the AI spending boom.However, investors will not be able to retrieve their funds as quickly as hoped, with Blue Owl saying it would be imposing a cap on withdrawals, equal to 5% of the value of each fund per quarter.“This decision was made in accordance with the fund structure, reflecting our commitment to balancing the interests of both tendering and remaining shareholders,” Blue Owl said in its letters to investors.Blue Owl said the withdrawals reflected “a period of heightened negative sentiment toward the asset class”, which it said had “intensified” due to rivals having published details of their own redemption requests.
But Blue Owl insisted that this surge in withdrawal requests did not reflect any problems in relation to the loans it issued to clients.“While we believe market perception has driven elevated tender activity, underlying credit fundamentals across our portfolio have remained resilient.”A spokesperson for the company declined to comment further.There have been growing concerns over potentially weak lending standards in the private credit industry, after a string of company failures featuring firms that secured corporate loans in the private market.That includes Tricolor and the US auto parts company First Brands, both of which collapsed last year, as well as Market Financial Solutions (MFS), the mortgage lender that went under in February amid allegations of fraud.
Private credit advocates have framed the failures as isolated cases that did not reflect standards across the wider industry.However, others – including JP Morgan’s chief executive, Jamie Dimon – have warned more “cockroaches” were likely to emerge, while the IMF has raised concerns about potential ripple effects that could hit high street banks.In an interview with Reuters on Wednesday, the governor of the Bank of England, Andrew Bailey, cautioned against dismissing recent private credit failures as isolated incidents.“Quite a few people have said to me, it’s fraud, it’s idiosyncratic … don’t read too much into it.Well, that’s a judgment,” he said, adding that a lack of transparency made it hard to determine overall risks across the sector.
Without transparency, confidence in the wider system could crumble.“If you then learn there is a lemon – a failure – you lose confidence in the whole system, because you say ‘there’s more lemons in there than I thought, more weak companies in there than I thought, and I don’t know where they are,’” Bailey said, referring to the crisis of confidence that led to the 2008 banking crash.“I’m not saying it’s going to happen,” he added.“But we’ve had this experience before, so we have to watch for this.”And although the private credit industry was concentrated in the US, Bailey said there could be spillovers into UK borders due to the interconnected nature of the global financial system.
Claude’s code: Anthropic leaks source code for AI software engineering tool
Anthropic accidentally released part of the internal source code for its AI-powered coding assistant, Claude Code, due to “human error”, the company said on Tuesday.An internal-use file mistakenly included in a software update pointed to an archive containing nearly 2,000 files and 500,000 lines of code, which were quickly copied to developer platform GitHub. A post on X sharing a link to the leaked code had more than 29m views early on Wednesday, and a rewritten version of the source code quickly became GitHub’s fastest-ever downloaded repository. Anthropic issued copyright takedown requests to try to contain the code’s spread. Within the code, users spotted blueprints for a Tamagotchi-esque coding assistant and an always-on AI agent, per the Verge
SpaceX confidentially files to go public at $1.75tn, reports say
SpaceX has confidentially filed for an initial public offering on the US stock market, according to reports from Bloomberg and the Wall Street Journal. The IPO is set to be one of the most closely watched and highly valued listings in market history.Elon Musk’s company, which has become a dominant power in both space travel and satellite communications, could potentially seek a valuation upwards of $1.75tn. The confidential filing will give regulators a period to review and discuss the company’s financial disclosures before investors and the public are able to view them
‘System malfunction’ causes robotaxis to stall in the middle of the road in China
A “system malfunction” has caused several self-driving robotaxis to stall in the middle of the road in China, police have confirmed, after distressed riders were stranded for hours.Local authorities in the central Chinese city of Wuhan said they began receiving calls “one after another” on Tuesday night from riders reporting that autonomous vehicles operated by the Chinese internet company Baidu had frozen.“Multiple Apollo Go cars stopped in the middle of the road, unable to move,” police said in a statement on Wednesday, referring to Baidu’s driverless taxi service. “After investigation, preliminary findings suggest the cause was system malfunction.”Baidu has a fleet of more than 500 driverless cars in Wuhan
Unregulated chatbots are putting lives at risk | Letters
Your coverage of AI-associated delusions exposes a gap that training-level guardrails cannot close (Marriage over, €100,000 down the drain: the AI users whose lives were wrecked by delusion, 26 March). As someone who has worked in health systems across fragile and low-income contexts, I find it striking that AI companies have failed to adopt a safeguard that even the most underresourced clinic in the world already uses: screening patients before exposing them to risk.The Patient Health Questionnaire-9 for depression and the Columbia Suicide Severity Rating Scale are administered daily in settings with no electricity, limited staff, and patients who may never have seen a doctor. These tools take minutes. They are validated across dozens of languages and cultural contexts
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Patrick McKeown obituary
For the past four years, the James Webb space telescope has been returning stunning images of stars and galaxies that formed in the early universe. Parked in orbit a million miles from the Earth, the observatory is an extraordinarily sophisticated machine that shares a special engineering heritage with a swelling number of modern devices, from mobile phones to medical scanners and turbine blades.All are products of precision engineering, a discipline that blends the traditions of surveying, navigation, astronomy and time-keeping to create the technology that underpins our lives today. And one of its prime exponents was Patrick McKeown.McKeown, who has died aged 95, wrote the “11 principles of machine design” that were a distillation of everything he had learned about accuracy, stability and error correction in mechanical systems, and that have become the bedrock of precision engineering across the world
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