Blue Owl Capital Corp (NYSE:OBDC), a Maryland-incorporated asset management firm, has announced an underwriting agreement for an additional issuance of $400 million in aggregate principal amount of its 5.950% Notes due 2029. The agreement, involving Blue Owl Credit Advisors LLC and a consortium of underwriters led by RBC Capital Markets, LLC and including MUFG Securities Americas Inc., SMBC Nikko Securities America, Inc., Santander (BME:SAN) US Capital Markets LLC, and SG Americas Securities, LLC, was entered on Monday.
The offering, expected to close on November 19, 2024, subject to customary closing conditions, was made under the company's existing shelf registration statement. The terms of the offering were detailed in a preliminary prospectus supplement, a final prospectus supplement, and a pricing term sheet, all dated Monday.
This transaction follows Blue Owl Capital's effective strategy to manage and expand its financial portfolio. The additional notes will bolster the company's capital structure and support its ongoing operations and investment activities. The underwriting agreement's specifics can be found in the full text filed with the SEC as Exhibit 1.1, which is incorporated by reference into this report.
Blue Owl Capital has a history of strategic financial management, and this offering represents a continuation of its efforts to optimize its capital allocation. The company's decision to issue additional notes is based on market conditions and internal assessments of its capital needs.
In other recent news, Blue Owl showcased a strong Q3 performance with a return on equity (ROE) of 12.4%, marking the seventh quarter of double-digit ROE. The company's net asset value (NAV) per share stood at $15.28, and an additional dividend of $0.05 was declared, supplementing a base dividend of $0.37 for the fourth quarter. Despite lower M&A activity, Blue Owl's direct lending strategy in the upper middle market remained resilient, with significant capital deployment and improvements in interest coverage ratios.
The merger with OBDE is progressing as planned, with closure expected in January 2025. Over $9.5 billion was deployed in capital, with 96% in first lien investments. The company's total liquidity is at $2.1 billion, with a net leverage ratio of 1.23x.
These recent developments reflect Blue Owl's strategic focus and resilience in a shifting interest rate landscape. The company's future expectations include expanding lending opportunities in alternative credit, data centers, and insurance sectors. The merger with OBDE is expected to enhance asset allocation and financing efficiency.
InvestingPro Insights
Blue Owl Capital Corp's (NYSE:OBDC) recent $400 million note issuance aligns with its strategic financial management, as reflected in several key metrics from InvestingPro. The company's strong dividend policy is evident, with InvestingPro data showing a substantial dividend yield of 11.61% as of the latest available data. This is further supported by an InvestingPro Tip indicating that OBDC "pays a significant dividend to shareholders" and "has raised its dividend for 3 consecutive years."
The company's financial health appears robust, with an InvestingPro Tip noting that "liquid assets exceed short term obligations." This liquidity position could provide flexibility in managing the newly issued notes. Additionally, OBDC's profitability is highlighted by another InvestingPro Tip, stating the company has been "profitable over the last twelve months."
With a P/E ratio of 9.25, OBDC seems to be trading at a relatively modest valuation compared to its earnings. This could be attractive to value-oriented investors, especially considering the company's consistent dividend growth.
For readers interested in a more comprehensive analysis, InvestingPro offers 7 additional tips for Blue Owl Capital Corp, providing deeper insights into the company's financial position and market performance.
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