Blue Owl Capital has sharply reduced the value of its loans to specialty materials manufacturer Loparex, highlighting renewed concerns over credit quality and valuation practices across the $1.8tn private credit market, according to a report by Bloomberg.
Blue Owl’s flagship public business development company, OBDC, moved its exposure to Loparex to non-accrual status following the second quarter, reflecting uncertainty over whether investors will ultimately recover the full value of their loans.
The move came after Moody’s Ratings classified Loparex as being in default and warned that a Chapter 11 bankruptcy could follow. The company, backed by Pamplona Capital Management, has been under pressure from a heavy debt burden for several years.
OBDC’s latest filings show just how quickly the valuation of the loans has deteriorated. Its second-lien exposure was valued at approximately 5 cents on the dollar at the end of the second quarter, down from about 63 cents at the end of March and roughly 88 cents at the end of 2025.
A first-lien loan that had previously been carried at close to par was valued at only around 22 cents.
The deterioration follows the collapse of a proposed M&A transaction that Loparex had been pursuing to inject new equity into the business and strengthen its balance sheet.
Speaking on OBDC’s recent earnings call, President Logan Nicholson said the proposed transaction would have provided a recapitalisation and improved liquidity, but ultimately fell through, prompting Blue Owl to mark down its position during the quarter.
Loparex had sought approximately $1.5bn from private credit lenders earlier this year to refinance its first- and second-lien borrowings, with some of the debt due to mature in early 2027. The company also missed an interest payment on its second-lien debt in June and is operating under a forbearance agreement through September.
OBDC’s overall non-accrual exposure remains relatively modest at around 0.8% of fair value. However, the speed of the Loparex write-down illustrates how quickly a loan that had previously been valued close to par can deteriorate once a borrower enters financial distress.
