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

Private credit vehicles managed by Blackstone and Blue Owl have attracted strong investor demand in the investment-grade bond market, raising more than initially planned as issuance from business development companies (BDCs) picks up after a quiet start to the third quarter, according to a report by Bloomberg.

Blackstone Private Credit Fund, known as BCRED, increased its planned five-year note offering to $750m from an initial target of about $500m. The transaction attracted peak orders of around $2bn, highlighting continued appetite for high-grade debt issued by private credit platforms.

Blue Owl Technology Finance also upsized its offering, pricing $400m of notes against an initial target of at least $200m. Investor orders reached approximately $1.05bn at their peak.

The Blue Owl notes were priced at a spread of 2.5 percentage points over US Treasuries, tighter than the 2.65-point spread on the existing bonds. BCRED’s debt was priced at a 2.05-point spread, around 25 basis points inside its initial price guidance.

The transactions follow a $350m bond sale by Barings Private Credit Corp. on 13 August, which was only the second US high-grade note issuance from a BDC since the beginning of July. By comparison, BDCs issued a combined $16bn of investment-grade bonds during the first half of the year.

The renewed activity comes as private credit managers seek to demonstrate continued access to the public debt markets amid investor scrutiny of the asset class. Concerns have emerged around valuations of software-related loans as investors assess the potential impact of artificial intelligence on technology businesses.

Some private credit vehicles, including funds managed by Blue Owl, have also faced elevated redemption requests and introduced limits on withdrawals. However, second-quarter results across the sector have helped ease some of those concerns.

Blue Owl Capital itself raised $750m through a bond offering the previous week, with investor orders reaching $3.3bn.

BCRED’s latest transaction follows an $850m bond sale in April. The two BDC offerings were among a broader wave of US investment-grade issuance on Monday, contributing to a record month for high-grade bond sales in August.