Blue Owl tech-focused BDC raises $150m
Blue Owl Technology Finance Corp (OTF), the technology-focused business development company operated by Blue Owl Capital, has raised a further $150m through a private placement of senior unsecured notes, according to a report by Bloomberg.
The technology-focused business development company (BDC) Blue Owl Technology Finance Corp (OTF), operated by Blue Owl Capital, has secured an additional $150 million through a private placement of senior unsecured notes. These notes carry a 7.6% coupon and are set to mature in September 2032. This transaction marks the third debt financing for OTF since June, bringing the total debt capital raised by the vehicle since the end of the second quarter to $800 million. This recent issuance features OTF’s highest coupon on a bond since September 2023, when the fund issued $75 million in notes at an 8.5% yield. In August, OTF also raised $400 million via 6.5% notes due in 2029 and secured an additional $250 million through a special-purpose vehicle facility backed by a portfolio of its investments. This additional funding is intended to enhance OTF’s capacity to deploy capital into private credit opportunities within the technology sector. Blue Owl chief executive Craig Packer noted that the expanded financing flexibility would enable the fund to grow its portfolio and capitalize on what the firm perceives as an increasingly attractive environment for technology investing. The fundraising occurs within a challenging environment for technology-focused private credit, characterized by increased investor caution regarding lending standards and the potential impact of artificial intelligence on software businesses prevalent in private credit portfolios. OTF has attempted to bolster its share price through stock buybacks, and management has indicated that its borrowers have shown limited evidence of significant AI-related disruption. Despite a partial recovery since early August, OTF shares remain approximately 21% lower for the year. Credit performance has also drawn closer scrutiny, with non-accruals increasing during the second quarter to 0.6% of the portfolio at cost, up from 0.3% in the preceding period. Concurrently, OTF has maintained substantial liquidity. The fund extended its $2.7 billion revolving credit facility during the second quarter, with all existing bank partners renewing their commitments. By the end of the period, OTF possessed over $2 billion in cash and available borrowing capacity across its credit facilities, providing considerable scope for funding new investments and managing current portfolio obligations. This continuous capital raising by OTF, despite a challenging market for technology-focused private credit, signals an ongoing demand for specialized financing in the tech sector, even as investors exercise increased caution. The rise in non-accruals alongside substantial liquidity and active share buybacks suggests a strategic effort to navigate market volatility while preparing for future growth opportunities within its niche.