Private credit funds return to investment-grade bond market

Blackstone Private Credit Fund is seeking about $500 million from a five-year note sale, and Blue Owl Technology Finance Corp. is marketing at least $200 million more of bonds it first sold in June, Bloomberg News reports. The investment-grade offerings land Monday after a quiet start to the third quarter for business development companies.

Barings Private Credit Corp. sold $350 million of high-grade notes on Aug. 13, just the second US high-grade note sale by a BDC since July began. BDCs issued a combined $16 billion of high-grade bonds in the first half, according to Bloomberg-compiled data. Blue Owl Capital, the manager behind Blue Owl Technology, priced $750 million of notes last week; orders peaked at $3.3 billion.

The deals test whether bond buyers share the relief that second-quarter results brought to fund investors. Private credit funds including Blue Owl's have been a source of concern this year as software-debt valuations fell on AI-disruption worries, and some funds capped how much investors could pull. Recent earnings eased those worries somewhat, Bloomberg News reports.

BCRED last tapped the market in April, raising $850 million. Its new five-year notes carry initial price talk of about 2.3 percentage points over Treasuries, according to people familiar with the deal. The two BDC offerings are among a dozen US high-grade deals on Monday, a calendar that pushes August issuance to a monthly record. For allocators, the spread is the read: a fund placing five-year money at roughly 230 basis points over Treasuries still commands bond-market trust after a stretch of redemption caps and AI-related valuation worries.