FACTBOX-From Blue Owl to First Brands: flashpoints in credit markets

By Manya Saini

March 12 (Reuters) - Investors are bracing for a flurry of bad news after a string of credit issues in recent weeks has drawn fresh scrutiny to the roughly $2 trillion private credit market.

Sentiment was already hit by questions about valuation and transparency, and specific situations such as the bankruptcy of auto-parts supplier First Brands, in which some private credit players had exposure.

Analysts still point to JPMorgan Chase JPM.N CEO Jamie Dimon's warning in October of "more cockroaches" lurking in the credit market as a potential source of investor anxiety, even though the issues so far do not appear to be systemic.

Shares of private equity firms and alternative asset managers have also come under pressure this year amid mounting unease over the valuations of software companies they own and lend to, as AI threatens to upend business models.

Below is a list of all the recent flashpoints in credit markets:

BLUE OWL OWL.N:

The alternative asset manager, which had more than $300 billion in assets as of December 31, said in February it would sell $1.4 billion of assets across three funds, and return part of the proceeds to some investors as well as pay down debt.

It permanently removed an option for investors in the smallest vehicle, mainly wealthy individuals, to withdraw funds every quarter.

The company in November unveiled a plan to merge publicly traded Blue Owl Capital Corp OBDC.N with non-traded business development company Blue Owl Capital Corp II.

But the decision to bar investors in the non-traded fund from redeeming capital until the merger closed hit its stock and ultimately led to the deal being scrapped.

BLACKROCK, BLACKSTONE AND MORGAN STANLEY'S PRIVATE CREDIT FUNDS:

BlackRock BLK.N said on Friday that it has limited withdrawals from a flagship debt fund after a surge in redemption requests.

Meanwhile, alternative asset manager Blackstone BX.N on March 2 disclosed that its private credit fund, known as BCRED, faced a surge in withdrawals in the first quarter.

Elsewhere, Morgan Stanley on March 11 said it had limited redemptions at one of its private credit funds after investors sought to withdraw almost 11% of shares outstanding.

FIRST BRANDS:

The U.S. auto parts maker filed for bankruptcy protection in September after disclosing liabilities exceeding $10 billion, marking the collapse of a company whose rapidly deteriorating finances have shocked debt investors.

U.S. investment bank Jefferies JEF.N and Swiss lender UBS UBSG.S have since disclosed exposure worth millions of dollars to First Brand.

Western Alliance WAL.N sued Jefferies on Friday for not completing payment of $126.4 million it owed to the regional lender for loans tied to bankrupt auto parts supplier.

Other major financial institutions have also been embroiled in the bankruptcy.

A joint venture between Norinchukin Bank and Mitsui & Co has an exposure of about $1.75 billion, Bloomberg News had reported in October.

Spanish bank Santander SAN.MC had debt exposure of at least $55 million by the end of September, a U.S. court document, seen by Reuters, showed.

Bank of America's BAC.N Chief Financial Officer Alastair Borthwick said in October that the lender's syndicated loans to First Brands are asset-backed and secured by collateral.

MARKET FINANCIAL SOLUTIONS:

Wall Street lenders were rocked by the implosion of little-known UK mortgage provider Market Financial Solutions in late February, which fuelled concerns about wider losses among banks and revived warnings of more "cockroaches" in the private credit industry.

The collapse of MFS hammered the shares of UK's Barclays BARC.L and Jefferies, and accelerated a broader selloff in financial firms and alternative asset managers at the time.

TRICOLOR:

The subprime lender and dealership filed for Chapter 7 bankruptcy in a Texas court in September. The company listed more than $1 billion in assets and over $1 billion in liabilities, with more than 25,000 creditors, according to its bankruptcy petition.

The bankruptcy followed a disclosure from Fifth Third Bancorp FITB.O on September 9 that it would take a material charge-off between $170 million and $200 million in the third quarter due to "alleged external fraudulent activity".

An attorney who helped Tricolor file for bankruptcy had previously declined to comment on the fraud allegations.

JPMorgan Chase also took a $170 million loss related to the situation. CEO Dimon described the bank's exposure as "not our finest moment," and said it was reviewing risk controls.