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What were the key takeaways from Blue Owl Capital’s earnings call?

- **Merger Accretion**: OBDC II merger adds $1 billion in assets, with expected 15-20bps ROE accretion from cost savings and asset yield differences.
- **Dividend Sustainability**: Q4 base dividend of $0.37 supported by $0.31 spillover income; 2026 outlook for potential reduction in a lower-rate environment.
- **Share Buyback**: $200 million buyback program to capitalize on 82% NAV discount, with no lockups for OBDC II shareholders.
- **Market Momentum**: Q3 originations of $1.3 billion, 33% pipeline growth in September, and 89% senior secured portfolio driving credit strength.
- **Portfolio Resilience**: 1.3% nonaccrual rate, 2.0x interest coverage ratio, and mid-single-digit EBITDA growth highlight credit quality.

**【CEO Summary Section】**
- Reported adjusted NII per share of $0.36, reflecting ROE of 9.5%, consistent with long-term averages despite a lower rate environment.
- Announced merger with OBDC II, adding $1 billion in net assets and enhancing scale with a combined portfolio of $18.9 billion across 239 companies.
- Emphasized direct lending focus, with 89% of portfolio in senior secured loans, and below-industry-average nonaccrual rate of 1.3%.
- Highlighted portfolio resilience, with average revenue and EBITDA growth of mid- to high single digits, and interest coverage ratio improving to 2.0x.

**【CFO Financial Commentary】**
- Q3 total net assets of $8 billion, with net leverage of 1.22x, within target range of 0.9-1.25x.
- Adjusted NII per share of $0.36, down from $0.40 due to lower nonrecurring income ($0.02 vs. $0.05 in Q2).
- Board declared a $0.37 base dividend for Q4, with spillover income of $0.31 supporting sustainability.
- Liquidity remains strong with $3 billion in cash and capacity, and no material short-term maturities.
- Merger with OBDC II expected to be accretive, with $5 million in first-year cost savings and potential for lower-cost capital over time.

**【Q&A Highlights】**
- **Merger Impact**: OBDC II's higher nonaccruals (60bps above OBDC) are immaterial due to overlap in portfolio names. Expected ROE accretion of 15-20bps from synergies and asset yield differences.
- **Dividend Outlook**: Base dividend may adjust in 2026 as rates decline, with historical reference point of $0.33 in a 3% rate environment. Current dividend of $0.37 is $0.01 above NII, supported by spillover income.
- **Share Repurchases**: New $200 million buyback program to address undervaluation (82% of NAV). No lockups for OBDC II shareholders, but tender history suggests limited selling pressure.
- **Market Activity**: Q3 originations of $1.3 billion, with 40% add-ons. Pipeline up 33% in September, driven by M&A activity and syndicated market spread tightening.
- **Credit Performance**: Nonaccruals at 1.3%, stable amendment activity, and average revolver draw below 20%, reflecting portfolio resilience.


Blue Owl Capital Corporation (OBDC) Q3 2025 Earnings Call Transcript

Revenue

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Financing Services Revenue

Other Revenue

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Operating Expenses

Selling, General and Administrative Expenses

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Net Income

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OBDC

OBDC fundamentals

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