Key Takeaways
- • Blue Owl Capital Corp (OBDC) cut its quarterly dividend to 31 cents per share from 36 cents, citing higher borrowing costs, according to a May 6 filing reported by Reuters.
- • Blue Owl Capital Corp's NAV per share fell 2.7% to $14.41 in the first quarter, while Blue Owl Technology Finance Corp's NAV per share dropped 4.8% to $16.49.
- • Blue Owl Technology Finance Corp maintained its 35-cent dividend plus a 5-cent special dividend, matching the prior quarter.
- • The two funds repurchased a combined $85 million of their own stock in the first quarter.
- • Non-accrual investments dipped quarter over quarter, while software exposure remains a concentration risk, at 16% of Blue Owl Capital Corp's portfolio and 33% of Blue Owl Technology Finance Corp's.
Summary
Blue Owl Capital Corp, a publicly traded private credit fund, reduced its dividend to 31 cents per share from 36 cents on Wednesday, May 6, as it reported a decline in net asset value per share in the first quarter, according to Reuters. The firm attributed the move to higher borrowing costs. A correction to the original report clarified that only one fund cut its dividend; Blue Owl Technology Finance Corp declared a 35-cent per share dividend plus an additional 5-cent special dividend, matching the previous quarter.
NAV performance was weaker across both vehicles. Blue Owl Capital Corp's NAV per share dropped 2.7% to $14.41 in the first quarter, and Blue Owl Technology Finance Corp's fell 4.8% to $16.49, according to their filings. The two funds bought back a combined $85 million of their own stock during the quarter. CEO Craig Packer said in a statement that the quarter reflected "a more challenging earnings environment driven by lower base rates and tighter spreads," adding that the portfolio "is delivering solid performance, and our balance sheet is strong." Filings showed the rate of investments on non-accrual, meaning borrowers had missed repayments or were unlikely to repay, declined from the prior quarter.
Both funds have traded lower over the past year alongside many similar vehicles amid broader jitters around private credit. Blue Owl Capital Corp drew investor scrutiny last year when Blue Owl proposed merging a smaller, non-traded fund into it. Blue Owl Technology Finance Corp was designed to invest in software, a sector pressured by fears of disruption from artificial intelligence. Software borrowers made up 33% of that fund's portfolio at the end of the first quarter, while Blue Owl Capital Corp held 16% of its portfolio in software names.
Earlier in the year, in February, Blue Owl sold a $1.4 billion portfolio of senior secured loans to boost liquidity in its Blue Owl Capital Corp II fund following elevated investor redemption requests. Separately, private credit lender Gladstone Capital Corp also reported first-quarter results on Wednesday, stating its NAV per share was relatively unchanged compared with six months earlier.
NAV performance was weaker across both vehicles. Blue Owl Capital Corp's NAV per share dropped 2.7% to $14.41 in the first quarter, and Blue Owl Technology Finance Corp's fell 4.8% to $16.49, according to their filings. The two funds bought back a combined $85 million of their own stock during the quarter. CEO Craig Packer said in a statement that the quarter reflected "a more challenging earnings environment driven by lower base rates and tighter spreads," adding that the portfolio "is delivering solid performance, and our balance sheet is strong." Filings showed the rate of investments on non-accrual, meaning borrowers had missed repayments or were unlikely to repay, declined from the prior quarter.
Both funds have traded lower over the past year alongside many similar vehicles amid broader jitters around private credit. Blue Owl Capital Corp drew investor scrutiny last year when Blue Owl proposed merging a smaller, non-traded fund into it. Blue Owl Technology Finance Corp was designed to invest in software, a sector pressured by fears of disruption from artificial intelligence. Software borrowers made up 33% of that fund's portfolio at the end of the first quarter, while Blue Owl Capital Corp held 16% of its portfolio in software names.
Earlier in the year, in February, Blue Owl sold a $1.4 billion portfolio of senior secured loans to boost liquidity in its Blue Owl Capital Corp II fund following elevated investor redemption requests. Separately, private credit lender Gladstone Capital Corp also reported first-quarter results on Wednesday, stating its NAV per share was relatively unchanged compared with six months earlier.
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