‘Price of liquidity’ too high: Some US private credit investors prefer to be trapped over 26% loss
Cox Capital offered to buy shares in five non-traded BDCs at a 26% discount, but investors largely refused. The BDCs are managed by HPS, Apollo, Ares, and Blue Owl. US private credit default rates hit a record high in April, causing investor withdrawals. Publicly traded BDCs' stocks rose 6% since Cox's offer, with Q2 earnings showing industry stability.
How this was made
The 30-second read
Why it matters
The limited response suggests investors are reluctant to accept heavy discounts, indicating muted short‑term pressure on the underlying BDC managers.
Market read
The article signals limited investor appetite for deep‑discount liquidity in the private‑credit BDC space, with modest immediate market impact.
What to watch
Potential future policy changes or credit‑market tightening could revive demand for liquidity solutions.
Background
Cox Capital attempted to buy shares of non‑traded BDCs at steep discounts amid a wave of redemption requests in the private‑credit market.
Ticker impact
Cox Capital's liquidity offer targeted BDCs managed by Apollo Global Management, but attracted less than $5M of orders.
Likely little to no immediate move in Apollo‑related BDC stocks.
The low order flow suggests limited pressure on the underlying assets.
Ares Management is one of the BDC managers whose shares were offered in Cox Capital's redemption proposal.
No significant price change expected for Ares‑related BDCs.
Sparse uptake indicates investors are not rushing to sell at the offered discount.
Market effects
Highlights ongoing stress in the private‑credit BDC sector and limited appetite for deep discounts.
U.S. private‑credit market shows signs of investor caution but no immediate regional fallout.
Limited; the issue is confined to U.S. non‑traded BDCs.
Counterpoint
The low uptake may signal that investors expect a rebound in BDC valuations, making the deep discount unattractive.
Key entities
- private_firmCox Capital Partners
Liquidity provider targeting non‑traded BDCs.
- public_companyApollo Global Management
Manager of one of the targeted BDCs.
- public_companyAres Management
Manager of a targeted BDC.
- public_companyBlue Owl Capital
Manager of a targeted BDC.
