Drip, Drip, Drip

It's called a Wile E. Coyote moment We are beginning to see big players rolling out strategies to prevent a run on their assets.

Today, it was Blue Owl Capital, who just made it significantly more difficult for their clients to withdrawing funds from their accounts.

This will not end well.

Shares of Blue Owl Capital, the giant private lender, plunged on Thursday after the company announced that it was changing how investors can get their money out from one of its funds, raising fresh concerns about potential problems lurking in the private credit industry.

Blue Owl said investors would not be able to ask for a set amount of money back every quarter. Going forward, the firm will decide how much it will pay out quarterly.

On a conference call with investors, Blue Owl executives sought to portray the changes favorably, but the announcement had the opposite effect as some investors worried that the moves could lead to obstacles to redemptions.

The company’s stock ended Thursday down 6 percent, after falling as much 10 percent earlier in the day. Other companies with exposure to private credit, including Ares, Apollo and Blackstone, fell more than 5 percent.

This is what companies do when they realize that they living on borrowed time.

Mohamed El-Erian, a Wall Street veteran and former chief executive of PIMCO, wrote on social media that Blue Owl’s change in redemption terms reminded him of the beginnings of the financial crisis when banks sought to contain the damage from the souring mortgage loans on their books.

“Is this a ‘canary-in-the-coalmine’ moment, similar to August 2007?” Mr. El-Erian wrote.

In just a few years, private credit has extended trillions of dollars in loans to business, and Blue Owl, which was founded in 2016, has amassed nearly $300 billion in investor money. But the industry exists outside the traditional, highly regulated banking system, and investors can see only a limited amount of information about private credit borrowers and the terms of their loans.

All of this is going on as the Trump administration is going hell bent for leather to roll back even the meager reforms instituted after the 2008 financial crisis.