The early stages of an avalanche? Radical investors further warn of the risks of private credit in the United States.

Last week, Blue Owl Capital announced the suspension of redemptions for its OBDC II fund, and the sale of some fund assets to return cash to investors. This news has sparked widespread concerns in the market, with analysts suggesting that it may expose a deep crisis in the US private credit industry. One of the latest individuals to issue a warning is the aggressive investor Boaz Weinstein. The founder of Saba Asset Management warned at an investment conference on Tuesday that the market is now in the early stages of a snowball effect, where just one snowball rolling down can trigger a crisis, and Blue Owl is that snowball. Blue Owl's transactions reflect the risks in the $1.8 trillion US private credit industry, as well as excessive spending on artificial intelligence. Private credit has become a key player in financing the AI industry over the past year, and AI has increasingly raised concerns about a bubble among investors. Weinstein has previously said that private credit was once seen as a financial paradise, offering double-digit returns easily in a rising market, but that era is rapidly coming to an end. Concerns about the disruptive impact of AI will not disappear quickly. However, he also pointed out that the market is misaligned, with some credit assets currently trading at historical highs while related stocks and fund structures are heavily discounted. He is leading Saba to acquire shares of OBDC II and has made cash purchase offers for Blue Owl's other funds, with expected prices 20% to 35% below net asset value. AI Bubble Blue Owl has been a leader in the investment data center boom. The company acquired control of large data center operator Stack Infrastructure in early 2025 for $1 billion through the acquisition of digital infrastructure fund IPI Partners. Subsequently, the company reached an agreement with the Qatar Investment Authority to create a permanent digital infrastructure platform. Blue Owl also cooperated on financing projects for several large-scale data centers with companies such as Oracle, OpenAI, Meta, and CoreWeave. However, AI data center projects are now under scrutiny due to rapid expansion and high-interest debt, leading to frequent rejections by lending institutions for Blue Owl in recent months. Insiders revealed that Blue Owl's current predicament is partly due to lenders and investors becoming increasingly cautious and unwilling to take on significant risk exposure for low credit-rated AI companies. The company's appeal to retail investors further exacerbates the issue, as it is easily impacted by investor panic selling. Mara Dobrescu, a senior analyst at Morningstar, stated that this is a typical asset-liability mismatch problem, and private equity funds should seek investors who have the financial ability to hold long-term without needing to redeem funds. Blue Owl's troubles have also caused volatility in the US stock market. Neil Wilson, a market analyst at Shengbao Bank, pointed out that the three main issues currently being considered by investors are the impact of AI on the tech sector, the US tariff turmoil, and the aftermath of Blue Owl's transactions in the private credit market. He analyzed that US private equity groups such as Blackstone have been buyers of software stocks, but concerns about software loan risk exposure in the market, as well as Blue Owl's announcement last week to suspend redemptions and sell direct loans, have led to some private equity company stocks leading the decline. This article is reprinted from "Financial Alliance", authored by Ma Lan; GMTEight editor: Feng Qiuyi.