Hi YXI friends,

Today, we are going to review Blue Owl Capital Corporation (OBDC), a very large BDC that specialises in lending to middle-market companies.

OBDC has a focus on first lien, unitranche, and second lien loans. Their ticket sizes range from $20 million to $250 million in companies with an EBITDA between $10 million and $250 million or a revenue of $50 million to $2.5 billion.

We recently flagged OBDC as one of the top choices among BDCs, with a live trade setup too. Today, we will dig a bit deeper on OBDC’s latest performance and investment potential.

Table of Contents

• 1. OBDC Is A Top 3 BDC By Size

• 2. Net Investment Income Has Been Stable

• 3. Dividends Remain Consistent

• 4. Peer Comparison Suggests Fair Pricing

• 5. Technical Analysis Points To The Upside

• 6. Rating: Overweight

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. OBDC Is A Top 3 BDC By Size

At $13 billion in Enterprise Value (with a minimal share price premium), OBDC enjoys a tight 3rd spot just behind FSK and ahead of BXSL. Once OBDC closes its merger with Blue Owl Capital Corporation III (OBDE), the combined portfolio will become approximately $17.7 billion, overtaking FSK.

OBDC’s investments have a fair value of $13.45 billion, from 219 issuers. 78% of the investments are in First Lien Senior Secured debt, while 5% are in Second Lien. 96.3% of debt investments are floating-rate instruments.

What I do dislike is the 14% allocation to preferred and common equity investments, which can create substantial valuation adjustments every quarter.

In Q3, OBDC committed $1.2 billion across 23 new and 14 existing portfolio companies. This was a slowdown from the $3.3 billion committed in Q2.

2. Net Investment Income Has Been Stable

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