Blue Owl BDC Q2 Key Metrics: Activity subdued as refis 'grind to a halt'

Blue Owl Capital Corporation (NYSE: OBDC) reported a diminution successful caller concern enactment successful Q2, which it attributed to depressed caller woody enactment and a marked driblet successful refinancing transactions.

"As overmuch arsenic 50%, oregon adjacent 75%, [of activity] successful immoderate fixed 4th came from refinancing oregon hold enactment from existing portfolio companies," said OBDC President Logan Nicholson connected an Aug. 6 net call. "In a spread-widening situation similar this, you spot that enactment grind to a halt."

OBDC's portfolio contracted successful Q2, pursuing respective consecutive quarters of nett repayments. The lender reported $219 cardinal of gross fundings successful Q2, against $747 cardinal of income and repayments. Overall, the just worth of OBDC's portfolio has declined to astir $15.0 billion, down from $16.9 cardinal 1 twelvemonth earlier.

"Activity is inactive muted. We're optimistic and anticipation that it picks up. There are rather a fewer radical who would similar to transact," Nicholson added.

Blue Owl highlighted its exit from a ample preferred equity concern successful the automotive level Mavis Tire. OBDC said it collected astir $274 cardinal successful cash, including $66 cardinal of accrued PIK interest. Blue Owl said the transaction marked its largest PIK concern realization to date.

PIK income represented 10.7% of concern income successful Q2, the lender said.

The Blue Owl BDC reported $99.4 cardinal successful nett unrealized losses during the caller quarter, led by a important markdown connected its loans to Loparex Group, a shaper of specialty insubstantial and protective films.

First- and second-lien loans to Loparex Group were moved to non-accrual successful Q2. Roughly $130.6 cardinal successful second-lien loans were marked astatine 5 cents connected the dollar, down from 63 cents successful the anterior quarter. Roughly $4.7 cardinal successful first-lien indebtedness was marked astatine 34 cents connected the dollar, down from 99 cents.

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"The institution had been pursuing a transformative M&A transaction, which would person recapitalized the concern with caller equity, improving the equilibrium expanse and liquidity," Nicholson said of Loparex Group. "However, the transaction fell isolated successful the end, which led to the markdown of our presumption during the quarter."

Loparex Group missed its June 30 involvement outgo connected its second-lien word indebtedness and failed to marque first-lien amortization payments. The institution has entered into a forbearance statement with its lenders, which volition expire connected Aug. 17, according to S&P and Moody's.

OBDC removed non-accruing loans to Walker Edison Furniture Company LLC from its portfolio during the quarter. The lender reported a $62.4 cardinal realized nonaccomplishment connected its concern successful Walker Edison.

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