Blackstone Formally Shelves $3 Billion Collateralized Fund Obligation as Hybrid CLO Plan Emerges

Blackstone has officially shelved a roughly $3 billion collateralized fund obligation it had been developing for one of its older secondaries funds, which held approximately 700 underlying investments. The firm had been working on the deal for months but was unable to find buyers for the equity tranche, the riskiest portion of such structures, prompting it to abandon the offering entirely.

Separately, Blackstone is developing a new type of hybrid CLO that combines broadly syndicated loans with private credit, a structure designed to pair the higher yields of direct lending with the depth of the leveraged loan market. The approach allows managers to shift the portfolio between the two asset classes and follows a similar instrument recently pioneered by Sona Asset Management.

Blackstone Vice Chairman Tom Nides said the firm is taking global headwinds from tariff wars and artificial intelligence concerns in stride, and that neither factor is significantly slowing deal or investment activity. UBS reiterated its rating on Blackstone stock while noting a lower realization outlook, and BX shares fell Wednesday, underperforming the broader market.

On the deal front, JPMorgan explored a "second-look" credit program for rejected co-branded card applicants and approached more than a dozen lenders including Blackstone, Blue Owl, KKR and Sixth Street, though JPMorgan said it currently has no plan to launch such a program. Anthropic is also in early talks to lease up to 1 gigawatt of data center capacity from Stream Data Centers, a deal that could draw on a previously disclosed $35 billion TPU leasing arrangement backed by Apollo and Blackstone. Cox Capital separately launched tender offers for shares of Blackstone private credit funds at a discount to net asset value.