Saba Capital’s Tender Offers for Private-Credit BDC Shares Receive Minimal Uptake

The $1.8 trillion private-credit market faced redemption pressure in 2026. Non-traded BDCs capped quarterly withdrawals at 5% of shares. Blue Owl halted quarterly redemptions in OBDC II in mid-February, shifting to periodic distributions that returned about 35% of NAV in 2026, targeting over 50% by year-end. Loan-quality concerns and the risk that artificial intelligence poses to the software industry have heightened investor caution.

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In early March 2026 Saba Capital offered to buy Blue Owl OBDC II at a 35% discount and Starwood SREIT at a 24% or 29% discount, depending on share class. The Blue Owl tender attracted under 1% of shares; Saba secured about $10 million face value across 190 trades, almost all from SREIT. Investors also sought $5.4 billion of redemptions from Blue Owl funds in Q1 2026.

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Boaz Weinstein, founder of Saba Capital, led the offers with Cox Capital Partners as co-bidder. Starwood chairman Barry Sternlicht pledged equity for redemptions. Targeted funds were Blue Owl OBDC II and SREIT; Saba also eyes bids on Cliffwater’s interval fund and holds a $40 million stake in FS KKR Capital Corp.

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Saba said its aim is to give retail investors in non-traded BDCs liquidity comparable to public markets and warns that stress in private credit is inevitable, noting “hundreds of billions of dollars” are illiquid. Blue Owl declined comment but confirmed its shift to periodic distributions after halting quarterly redemptions. Sternlicht announced an equity injection to meet redemption requests, which Saba praised.

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Investors largely rejected the offers, keeping shares despite steep discounts. Sub-1% participation signals limited appetite for cash and suggests a ceiling to the private-credit malaise, even as loan-quality concerns and AI-risk worries persist.

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Sources list the SREIT discount as either 24% or 29% by share class. The exact number of SREIT shares tendered is undisclosed, with only the $10 million face-value total reported.

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Saba is evaluating bids for Cliffwater’s interval fund, Blue Owl’s OCIC, and Blue Owl Credit Income Corp., while keeping a $40 million stake in FS KKR Capital Corp. It expects credit risk to rise into 2027-2028, expanding the “opportunity set for providing liquidity at scale.”

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• “hearing from investors in these funds that they wanted their money back,” — Boaz Weinstein, Founder, Saba Capital Management

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• “We intend to be a consistent, credible bid in this market.” — Saba Capital Management (statement)

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• “We believe our entry into this market was a catalyst for that outcome and that all SREIT investors have benefitted as a result,” — Saba Capital Management (statement)

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• “buying pessimism” — Boaz Weinstein, Saba Capital Management

Bloomberg