By Bill Alpert

With private credit under klieg lights, Apollo Global Management is telling investors not to heed negative headlines about that market.

On the firm's earnings call Wednesday evening, CEO Mark Rowan said the media was fixated on the $2 trillion market for leveraged loans to corporate buyouts, instead of the larger investment-grade lending that Apollo has pursued.

Individual investors have crowded the exits lately at the nontraded funds that make buyout loans, while publicly traded funds have fallen to steep discounts. Anxieties center on the threat that new artificial-intelligence tools pose to the software businesses in those portfolios.

"The obsession with this very narrow corner of the market, this $2 trillion slice of levered lending, is, frankly, a failure of imagination, " Rowan sad.

March was a mixed quarter for funds focused on buyout lending. Blackstone's publicly traded Blackstone Secured Lending Fund held its dividend steady, while Blue Owl Capital's big listed fund cut its payout, blaming lower benchmark interest rates.

As for Apollo, the alternative asset manager raised piles of fresh capital, grew its fees, and upped its dividend in the March quarter.

Credit funds are now over 80% of the assets managed by Apollo, and they generate 75% of its fees, so Rowan spent much of Wednesday's conference call discussing public perceptions of private credit.

More than 80% of Apollo's borrowers are investment-grade businesses, he said, with fewer than 2% from the software industry.

"In credit, almost everything we've done recently is upmarket, moving more toward investment grade," Rowan said.

The pricing of privately held loans and equities has come under scrutiny, as the federal government cleared the way for these assets to go into 401(k) retirement plans. Rowan told callers that Apollo will have daily pricing for its investment-grade credit assets by June, and for all of its credit funds by September.

Raising money is almost as important as investing it in the alternative asset business, and Apollo's coffers swelled in the March quarter. Including $65 billion that its Athene business got with an acquisition, Apollo added $115 billion to bring the assets it manages above $1 trillion for the first time.

All those assets lifted Apollo's fee earnings 30% from the year-ago quarter, and grew its net income 8%, to $1.21 billion, or $1.94 a share. As for investing performance, the firm's private equity and asset-backed finance funds lost money. Its other credit and equity strategies turned profits, in a quarter when the S&P 500 lost 4%.

For its next quarterly payout, Apollo upped its common stock dividend to 56 cents a share, from 51 cents in recent quarters. Its stock is down about 1% from last week, to $127.25 a share.

The direct loans to private equity buyouts, which Rowan called leverage lending, fill the portfolios of business development companies like Apollo's MidCap Financial Investment. That publicly traded BDC maintained its quarterly dividend of 31 cents a share, while reporting a loss from markdowns of its portfolio.

The $15 billion Blue Owl Capital Corp. is the second largest publicly traded BDC, and it marked down its March net asset value to $14.41 a share, from the December 2025 level of $14.81. The fund's borrowers are still making their payments, but lower overall interest rates dropped the fund's net investment income to 31 cents a share, from the year-ago 41 cents.

Blaming lower rates, the Blue Owl BDC trimmed its next quarterly dividend payout, to 31 cents a share, from 37 cents in March. Another fund managed by the firm, the Blue Owl Technology Finance Corp. Corp., maintained its quarterly dividend at 40 cents.

The $14 billion Blackstone Secured Lending Fund pursues a more conservative strategy than many other large listed funds, and it reminded investors Wednesday that 98% of its holdings were first-lien senior loans, rather than the junior debt and equities held elsewhere. Only 7% of its March investment income came from noncash coupon payments, and that income fully covered the fund's 77-cent-a-share dividend.

Like its peers, however, write-downs on the Blackstone fund's software holdings trimmed the March net asset value to $26.26 a share, from December's level of $26.92.

Write to Bill Alpert at william.alpert@barrons.com

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May 07, 2026 14:25 ET (18:25 GMT)

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