KBRA assigns a rating of BBB to Blue Owl Capital Corporation's (NYSE: OBDC or "the company") $600 million 5.95% senior unsecured notes due March 15, 2029. The Outlook for the rating is Positive. The proceeds will be used to repay borrowings under the company's secured revolving facility and/or SPV asset facility II.

Key Credit Considerations

The rating and the Positive Outlook are supported by the company’s ties to the solid $79.5 billion Blue Owl direct lending platform, the derived benefits from OBDC’s SEC exemptive relief to co-invest with other funds managed by the advisor and its affiliates, and its diversified $12.9 billion investment portfolio comprised mostly of senior secured loans (82.7%) to mostly upper middle market companies in mainly non-cyclical industries, as of September 30, 2023. The rating also reflects the company’s solid management team, which has a long track record of working within the private debt markets with each member of the Investment Committee having an average of over 30 years of experience in the industry. Additionally, the company maintains a prudent leverage target of 0.9x to 1.25x, which KBRA considers appropriate, allowing OBDC to absorb increased market volatility as well as a potential increase in non-accruals as we remain in an uncertain economic environment with increasing risk of a recession with high base rates for longer. Non-accruals remain relatively low at 0.80% and 0.95% of total investments at fair value and cost, respectively, as of September 30, 2023. KBRA believes that OBDC benefits from the company’s solid underwriting and focus on portfolio companies in the upper middle market with EBITDAs in excess of $100 million. OBDC’s profitability has benefited from the rising interest rate environment with an asset sensitive balance sheet with the majority of its investments variable rate loans. OBDC maintains solid access to the capital markets with a diversified funding mix of secured bank facilities, CLOs, and senior unsecured debt. Approximately 58% of the company’s total outstanding debt was comprised of senior unsecured notes which allows for solid unencumbered assets for noteholders. The strengths are counterbalanced by the potential risk related to the company’s illiquid investments, retained earnings constraints as a Regulated Investment Company (RIC), and an uncertain economic environment and geopolitical risks.

Blue Owl Capital Corporation is an externally managed, non-diversified closed-end management investment company that has elected to be treated as a Business Development Company (BDC) under the 1940 Act and has elected to be treated as a RIC, which, among other things, must distribute to its shareholders at least 90% of the company’s taxable income. The company was formed as a Maryland Corporation in October 2015 and was publicly listed on the NYSE in July 2019. The company is managed by Blue Owl Credit Advisors LLC, an indirect subsidiary of Blue Owl Capital,Inc. (NYSE: OWL), which had approximately $157 billion of assets under management as of September 30, 2023. The company’s investment strategy coincides with the strategies of Blue Owl Capital Corporation II (KBRA Issuer/Senior Unsecured Debt ratings of BBB/Positive Outlook), Blue Owl Capital Corporation III (KBRA Issuer/Senior Unsecured Debt ratings of BBB/Stable Outlook), and Blue Owl Credit Income Corp. (KBRA Issuer/Senior Unsecured Debt ratings of BBB/Stable Outlook).

Rating Sensitivities

Given the Positive Outlook, the company’s ratings could be upgraded in the medium term provided its credit metrics remain solid despite an uncertain economic environment amid higher rates, inflation, and geopolitical risks. A rating downgrade and/or Outlook change to Stable or to Negative could be considered if there is a significant downturn in the U.S. economy with negative impact on OBDC's earnings performance, asset quality, and leverage. A significant change in senior management and/or risk management policies could also lead to a negative rating action.

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Methodologies

Financial Institutions: Finance Company Global Rating Methodology

ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1003016

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