"Blue Owl Capital ( ) shares are falling 9% in morning trading today after the firm announced it would permanently halt quarterly redemptions from its Blue Owl Capital Corporation II fund, known as OBDC II. This non-traded business development company (BDC), aimed at individual investors, will instead provide liquidity through periodic distributions as it sells assets and collects loan repayments."
"Blue Owl is ending the quarterly tender offers in OBDC II, where investors could previously redeem up to 5% of the fund's net asset value each quarter. Instead, the fund will distribute capital quarterly, starting with about 30% of net asset value (NAV) by the end of March and funded by the recent asset sale and ongoing loan maturities. The $600 million in loans sold from OBDC II came from 128 companies across 27 industries and fetched 99.7% of par value, thus avoiding steep discounts."
Blue Owl permanently ended quarterly tender offers for OBDC II, replacing 5% quarterly redemptions with periodic quarterly distributions funded by asset sales and loan maturities. The firm sold $1.4 billion of direct lending investments across three funds, including $600 million from OBDC II at 99.7% of par. OBDC II will distribute about 30% of NAV by the end of March. Rising redemption requests and elevated default and downgrade rates for middle-market borrowers made maintaining prior redemption rates risky for remaining investors. OBDC II was launched in 2017 with a finite life near 10 years and faces a potential wind-down around 2027.
Read at 24/7 Wall St.
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