Blue Owl Capital (NYSE:OBDC) reported third-quarter 2026 adjusted net investment income of $0.33 per share, exceeding its $0.31 base dividend, as improved portfolio valuations and share repurchases lifted net asset value.
Net asset value per share rose to $14.32 as of September 30 from $14.26 at the end of the prior quarter. Chief Executive Officer Craig Packer said tighter spreads and higher portfolio marks contributed to the increase, while no new borrowers were added to non-accrual status during the quarter.
The board declared a fourth-quarter base dividend of $0.31 per share, payable January 15 to shareholders of record on December 31. It also declared a $0.01 supplemental dividend, payable December 15 to shareholders of record on November 30.
Earnings outlook and investment activity
Packer said wider spreads on new investments and higher base rates should support earnings in coming quarters. Responding to an analyst’s question about whether earnings were at or near a trough, he said the characterization was a good one and that the company expected results to improve.
Chief Financial Officer Jonathan Lamm said 95% of Blue Owl’s debt investments carry floating rates. A 100-basis-point increase in base rates would raise quarterly earnings by approximately $0.02 per share, all else being equal, he said. The benefit from the Federal Reserve’s September rate increase is expected to begin flowing through in the fourth quarter as loans reset.
Third-quarter earnings benefited primarily from elevated dividend income, Lamm said. President Logan Nicholson said most dividend income was recurring, but a transaction involving Loparex contributed a temporary increase of approximately $0.01 to $0.02 per share during the quarter.
New investment commitments exceeded $890 million, with more than $700 million funded. More than half of fundings went to existing borrowers, and origination activity included 14 new names. Repayments totaled approximately $634 million, largely offsetting new fundings.
The weighted average spread on new floating-rate investments rose to 5.2% from 4.8% in the fourth quarter of 2025, Nicholson said. He cited additional financing for Big Brand Tire & Service as an example: Blue Owl’s new and existing loans were priced at a spread of 575 basis points over SOFR, up from 450 basis points previously.
Credit quality and portfolio performance
Blue Owl’s portfolio was invested across 233 companies in 29 industries, with 79% of its fair value in senior secured loans. Nicholson said portfolio companies’ revenue and earnings before interest, taxes, depreciation and amortization grew in the mid-single digits year over year.
Non-accrual investments remained at 0.8% of the portfolio at fair value. Although one additional tranche of an existing non-accrual borrower was added, there were no new issuers on non-accrual, Nicholson said.
After quarter-end, the company resolved several larger non-accrual positions, including National Dentex, QC Supply and Loparex. Nicholson said quarter-end marks already reflected management’s visibility into those outcomes, and the company expected limited, if any, future impact on net asset value.
Borrower interest coverage remained at approximately 2 times. Nicholson estimated that another 100-basis-point rate increase would reduce coverage to about 1.8 times, all else equal. The company’s watch list, comprising investments rated three through five, stood at approximately 9.4% of the portfolio at fair value.
Payment-in-kind income fell to 9.9% of total investment income from 10.7% in the prior quarter. Nicholson said the decline reflected both lower use of PIK options and repayments of larger PIK investments. He said year-to-date cash collections of PIK exceeded PIK accruals.
Repurchases, funding and valuations
Blue Owl repurchased $35 million of stock during the quarter, adding $0.02 to net asset value per share, Lamm said. Repurchases totaled $254 million over the past year, and approximately $195 million remained available under the company’s current $300 million authorization.
Net leverage ended the quarter at 1.13 times, within Blue Owl’s target range of 0.9 to 1.25 times. The company reported approximately $3.6 billion in liquidity, including cash and undrawn credit-facility capacity, and closed a $292 million collateralized loan obligation in September.
Asked about refinancing more than $1 billion of unsecured notes coming due over the following 12 months, Lamm said the company would consider both unsecured and generally cheaper secured funding. He said some financing costs would rise as fixed-rate notes issued during the zero-rate environment mature, but that lower secured-financing spreads could help offset the increase.
Packer also pointed to realizations at OBDC II, a separate fund with overlapping investments, as evidence supporting Blue Owl’s portfolio valuations. He said OBDC II had exited approximately $1 billion of investments since the beginning of the year, with every exit at or above its marks. Packer said the company hoped those results would improve investor confidence in its valuations and help narrow the discount between its stock price and net asset value.
About Blue Owl Capital (NYSE:OBDC)
Blue Owl Capital Corporation (NYSE:OBDC) is a business development company focused on providing financing to middle-market companies. The company is externally managed by Blue Owl Credit Advisors LLC, an affiliate of Blue Owl Capital Inc, and seeks to generate income and capital appreciation through investments in privately negotiated transactions.
OBDC primarily invests in senior secured loans, including first-lien and unitranche debt, as well as second-lien loans and, to a lesser extent, equity investments and other securities.
