Private credit roundup: Earnings hold up as defaults, redemptions remain elevated
FILE PHOTO: A logo for Blue Owl Capital is displayed on a midtown Manhattan office building in New York City, U.S., February 24, 2026. REUTERS/Brendan McDermid/File Photo
July 31 : Ares Capital and Blue Owl Capital reported resilient second-quarter results this week, while Ares Management posted record fundraising, highlighting continued institutional demand for private credit despite rising defaults, retail redemptions and liquidity concerns.
Ares Management, one of the industry's largest players, raised a record $36 billion in the second quarter, including $23.7 billion for its credit strategies. Assets under management rose 17 per cent from a year earlier to $671.3 billion.
"Clients continue to reward us due to our strong and consistent fund performance across our strategies," Ares Management Chief Executive Michael Arougheti said.
Ares Management deployed $35.9 billion during the quarter and ended June with a record $170 billion of uninvested capital. The firm said its investment pipeline was improving after a subdued period for dealmaking, as geopolitical uncertainty weighed on sponsor-backed transactions.
Separately, Ares Capital, the largest publicly traded business development company (BDC), reported core earnings of 47 cents per share, in line with the LSEG consensus estimate. It maintained its quarterly dividend and had about $6 billion of available liquidity as of July 23.
Blue Owl Capital reported $319 billion of assets under management at the end of June, up 12 per cent from a year earlier. Its distributable earnings rose 9 per cent, matching analysts' average estimate.
But signs of stress remain across parts of the market.
Fitch Ratings said the U.S. private-credit default rate rose to a record 6.0 per cent in the 12 months through June, from 5.7 per cent in the previous quarter. The agency recorded 32 default events in the second quarter involving 20 new borrowers.
Industrials and manufacturing had the highest default rate among major sectors, at 10.4 per cent, while healthcare stood at 9.4 per cent, Fitch said.
At the same time, retail-focused private-credit funds continued to receive redemption requests well above their normal quarterly repurchase limits.
Jefferies said private-credit inflows were down about 25 per cent year-to-date from the same period in 2025. Second-quarter redemption requests reached 38.1 per cent of net asset value at Blue Owl Technology Income Corp, 18.9 per cent at Blue Owl Credit Income Corp and 16.8 per cent at Apollo Debt Solutions.
Most funds repurchased shares equivalent to about 5 per cent of net asset value during the quarter, leaving some investors with withdrawal requests rolled into future periods.
Evercore estimated global private credit secondary-market volume reached $20.4 billion in the first half of 2026, up 122 per cent from a year earlier and exceeding the total recorded in all of 2025. GP-led deals, in which managers offer investors the option of selling or rolling holdings into a new vehicle, accounted for 83 per cent of the total.
Evercore expects BDCs, semi-liquid funds and interval funds to account for about a quarter of credit-secondary activity this year as managers seek to meet investor liquidity needs.
