Blue Owl Capital has sharply reduced the value of its loans to specialty materials manufacturer Loparex, according to Private Equity Wire, citing 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.
Non-accrual shift follows Moody’s default classification
The move to non-accrual came after Moody’s Ratings classified Loparex as being in default and warned that a Chapter 11 bankruptcy could follow, according to Private Equity Wire. Loparex is backed by Pamplona Capital Management and has been under pressure from a heavy debt burden for several years.
The write-down was framed in the source as part of renewed concerns over credit quality and valuation practices across the $1.8tn private credit market, according to Private Equity Wire.
Filings show rapid valuation deterioration in liens
OBDC’s latest filings show a rapid deterioration in the valuation of its Loparex loans. OBDC’s 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.
OBDC’s overall non-accrual exposure remains relatively modest at around 0.8% of fair value.
Proposed M&A transaction collapse preceded markdown
The deterioration in OBDC’s Loparex marks followed 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. 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.
Earlier this year, Loparex sought approximately $1.5bn from private credit lenders to refinance its first- and second-lien borrowings, with some of the debt due to mature in early 2027. Loparex also missed an interest payment on its second-lien debt in June and is operating under a forbearance agreement through September.
Widely known context: a loan placed on non-accrual status typically stops recognizing interest income for accounting purposes. Widely known context: “first-lien” and “second-lien” generally refer to seniority in a borrower’s capital structure and priority in recoveries.
