- Headlines about Blue Owl Capital have sparked fears about the state of private credit.
- BofA says worries are driven by a lack of understanding and misinformation.
- The analysts say the panic-fueled sell-off has created a buying opportunity in Blue Owl stock.
Canary in the coal mine. The next financial crisis. "Cockroaches". Those are all phrases used in recent, panicked discussions of private credit, but according to Bank of America, commentary from the bears is creating a stream of misinformation that's to blame for the sector's recent troubles.
The Financial Times last week reported that Blue Owl, an alternative asset manager focused on private credit, froze withdrawals from one of its funds offered to retail investors, generating fresh concerns about the market and sparking comparisons to the financial crisis.
Economist Mohamed El-Erian said the situation could be a "canary-in-the-coalmine" moment akin to 2007, before the onset of the Great Financial Crisis. US Treasury Secretary Scott Bessent said he's "concerned" and watching the Blue Owl news. Adding to the troubles, Business Insider reported that Blue Owl was unable to finance a data center set to be occupied by CoreWeave.
Blue Owl stock has fallen more than 16% in five days.
Yet, Bank of America analysts wrote on Monday that they're not worried about private credit, indicating they're surprised so many are. They say investors' worries are being driven by a lack of understanding about what private credit is.
"There is a significant level of misinformation weighing on OWL and the private credit industry which has led to a particularly attractive buying opportunity for OWL," the analysts wrote.
Bank of America's price target for Blue Owl stock implies a more than 100% upside.
It said there are a few reasons it remains upbeat on the sector. For one, BofA said that Blue Owl's data center exposure is separate from the rest of its private credit business. It also believes credit quality in the software sector is strong. Finally, last year's high-profile blowups of First Brands and Tricolor Holdings weren't precursors to a wider spate of private credit crises.
BofA was bullish on the private credit space coming into 2026, and it remains upbeat in the long term.
"We continue to view private credit as an attractive contributor to a US retirees' portfolio given the high returns, downside protection and monthly dividends and it has even outperformed most equity strategies over the last three years," the bank wrote.
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