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Blue Owl Technology Finance Achieves BBB Rating for $650M Notes and Announces $15.8B Merger Plans

January 13, 2025

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Blue Owl Technology Finance Secures BBB Rating for $650M Notes, Plans $15.8B Merger

KBRA has assigned a BBB rating with a Stable outlook to Blue Owl Technology Finance Corp.’s (OTF) $650 million senior unsecured notes due March 2028. OTF operates within the $128.4 billion Blue Owl Credit platform and maintains a $6.4 billion diversified investment portfolio, primarily consisting of first lien senior secured loans (69.6%) in technology-focused companies.

The company’s portfolio includes traditional financing (75.1%) with weighted average EBITDA of $201 million, and growth capital (23.9%) with average annual revenue of $724 million. Key sector exposures include Systems Software (23.9%), Health Care Technology (16.0%), and Application Software (14.0%). The company maintains solid financial metrics with gross and net leverage of 0.84x and 0.78x respectively, and 218% asset coverage.

OTF has announced a merger with Blue Owl Technology Finance Corp. II, expected to close in 2Q25, creating a combined entity with approximately $15.8 billion in total assets at fair value.

KBRA ha assegnato un rating BBB con un outlook stabile alle note senior non garantite da 650 milioni di dollari di Blue Owl Technology Finance Corp. (OTF), in scadenza a marzo 2028. OTF opera all’interno della piattaforma di credito Blue Owl, del valore di 128,4 miliardi di dollari, e mantiene un portfolio di investimenti diversificato di 6,4 miliardi di dollari, composto principalmente da prestiti garantiti di primo grado (69,6%) in aziende focalizzate sulla tecnologia.

Il portafoglio della società include finanziamenti tradizionali (75,1%) con un EBITDA medio ponderato di 201 milioni di dollari e capitale di crescita (23,9%) con un fatturato medio annuale di 724 milioni di dollari. Le principali esposizioni settoriali includono software di sistema (23,9%), tecnologia sanitaria (16,0%) e software applicativo (14,0%). La società mantiene solidi indicatori finanziari con leva finanziaria lorda e netta rispettivamente di 0,84x e 0,78x, e una copertura patrimoniale del 218%.

OTF ha annunciato una fusione con Blue Owl Technology Finance Corp. II, prevista per chiudere nel secondo trimestre del 2025, creando un’entità combinata con circa 15,8 miliardi di dollari in attivi totali a valore equo.

KBRA ha asignado una calificación BBB con perspectiva estable a las notas senior no garantizadas de 650 millones de dólares de Blue Owl Technology Finance Corp. (OTF), que vencen en marzo de 2028. OTF opera dentro de la plataforma de crédito de Blue Owl, que tiene un valor de 128.4 mil millones de dólares, y mantiene un portafolio de inversiones diversificado de 6.4 mil millones de dólares, compuesto principalmente por préstamos garantizados de primer grado (69.6%) en empresas enfocadas en tecnología.

El portafolio de la compañía incluye financiamiento tradicional (75.1%) con un EBITDA promedio ponderado de 201 millones de dólares, y capital de crecimiento (23.9%) con ingresos anuales promedio de 724 millones de dólares. Las exposiciones clave por sector incluyen software de sistemas (23.9%), tecnología de salud (16.0%) y software de aplicaciones (14.0%). La compañía mantiene sólidos indicadores financieros con apalancamiento bruto y neto de 0.84x y 0.78x, respectivamente, y una cobertura de activos del 218%.

OTF ha anunciado una fusión con Blue Owl Technology Finance Corp. II, que se espera cerrar en el segundo trimestre de 2025, creando una entidad combinada con aproximadamente 15.8 mil millones de dólares en activos totales a valor razonable.

KBRA는 Blue Owl Technology Finance Corp.(OTF)의 6억 5천만 달러 규모의 만기 2028년 3월의 비담보 채권에 대해 BBB 등급 및 안정적인 전망을 부여했습니다. OTF는 1,284억 달러 규모의 Blue Owl 신용 플랫폼 내에서 운영되며, 주로 기술 중심 기업의 선순위 담보 대출(69.6%)로 구성된 64억 달러의 다각화된 투자 포트폴리오를 유지하고 있습니다.

회사의 포트폴리오는 전통적인 자금 조달(75.1%)을 포함하며, 가중 평균 EBITDA는 2억 1백만 달러이고, 성장 자본(23.9%)은 연평균 수익 7억 2천4백만 달러를 기록하고 있습니다. 주요 산업 노출에는 시스템 소프트웨어(23.9%), 의료 기술(16.0%) 및 애플리케이션 소프트웨어(14.0%)가 포함됩니다. 회사는 각각 0.84x 및 0.78x의 총 및 순 부채 비율과 218%의 자산 커버리지를 유지하고 있습니다.

OTF는 Blue Owl Technology Finance Corp. II와의 합병을 발표했으며, 2025년 2분기에 마감될 예정이며, 공정 가치로 약 158억 달러의 총 자산을 가진 결합된 법인을 창출할 예정입니다.

KBRA a attribué une note BBB avec une perspective stable aux obligations senior non sécurisées de 650 millions de dollars de Blue Owl Technology Finance Corp. (OTF), arrivant à échéance en mars 2028. OTF opère au sein de la plateforme de crédit Blue Owl d’une valeur de 128,4 milliards de dollars et maintient un portefeuille d’investissements diversifié de 6,4 milliards de dollars, principalement composé de prêts garantis de premier rang (69,6%) dans des entreprises axées sur la technologie.

Le portefeuille de la société comprend un financement traditionnel (75,1%) avec un EBITDA moyen pondéré de 201 millions de dollars, et un capital de croissance (23,9%) avec des revenus annuels moyens de 724 millions de dollars. Les principales expositions sectorielles incluent le logiciel système (23,9%), la technologie de la santé (16,0%) et le logiciel applicatif (14,0%). La société maintient des indicateurs financiers solides avec un effet de levier brut et net de 0,84x et 0,78x respectivement, et une couverture d’actifs de 218%.

OTF a annoncé une fusion avec Blue Owl Technology Finance Corp. II, qui devrait se clôturer au deuxième trimestre de 2025, créant une entité combinée avec environ 15,8 milliards de dollars d’actifs totaux à la juste valeur.

KBRA hat Blue Owl Technology Finance Corp.s (OTF) 650 Millionen Dollar Senior Unsecured Notes mit einer BBB-Bewertung und stabiler Aussichten bewertet, die im März 2028 fällig sind. OTF operiert innerhalb der 128,4 Milliarden Dollar schweren Blue Owl Kreditplattform und verwaltet ein 6,4 Milliarden Dollar diversifiziertes Investitionsportfolio, das hauptsächlich aus vorrangigen gesicherten Darlehen (69,6%) in technologieorientierten Unternehmen besteht.

Das Portfolio des Unternehmens umfasst traditionelle Finanzierungen (75,1%) mit einem gewichteten durchschnittlichen EBITDA von 201 Millionen Dollar und Wachstumskapital (23,9%) mit einem durchschnittlichen Jahresumsatz von 724 Millionen Dollar. Schlüsselbranchen sind Systemsoftware (23,9%), Gesundheitstechnologie (16,0%) und Anwendungssoftware (14,0%). Das Unternehmen weist solide Finanzkennzahlen mit einer Brutto- und Nettoverschuldung von 0,84x bzw. 0,78x und einer Vermögensdeckung von 218% auf.

OTF hat eine Fusion mit Blue Owl Technology Finance Corp. II angekündigt, die voraussichtlich im 2. Quartal 2025 abgeschlossen werden soll, wodurch ein kombiniertes Unternehmen mit einem Gesamtvermögen von etwa 15,8 Milliarden Dollar zum Marktwert entsteht.

Positive

Strong portfolio diversification with 69.6% in first lien senior secured loans

Solid financial metrics with gross leverage of 0.84x, below target range

Robust asset coverage ratio of 218%

Low non-accrual rate of 0.1% at fair value

Strategic merger to create $15.8B combined asset entity

Negative

High exposure (20%) to more volatile preferred and common equity

$1.2 billion of unsecured notes due within two years

Exposure to economic uncertainties including high base rates and inflation

Insights

This BBB rating assignment with a stable outlook for Blue Owl Technology Finance Corp.’s $650 million senior unsecured notes reflects solid fundamentals with some notable strengths and risks. The portfolio quality stands out with 69.6% in first-lien senior secured loans and impressive portfolio company metrics (average EBITDA of $201 million). The conservative leverage profile of 0.84x gross and 0.78x net provides significant headroom below their target range.

The upcoming merger with Blue Owl Technology Finance Corp. II will create a substantially larger entity with $15.8 billion in total assets, potentially improving economies of scale and market position. However, key risks include exposure to illiquid investments and potential vulnerability to economic headwinds given the high interest rate environment.

The portfolio composition reveals sophisticated risk management and sector positioning. The focus on technology lending with major allocations to systems software (23.9%), healthcare technology (16.0%) and application software (14.0%) shows strategic positioning in high-growth sectors. The dual portfolio approach – traditional financing and growth capital – provides diversification while maintaining strong credit metrics.

The minimal non-accrual rate of 0.1% by fair value demonstrates excellent credit selection, though this could face pressure in a challenging macro environment. The asset coverage ratio of 218% provides a robust buffer against potential losses.

01/13/2025 – 05:00 PM

NEW YORK–(BUSINESS WIRE)–
KBRA assigns a rating of BBB to Blue Owl Technology Finance Corp. (“OTF” or “the company”) $650 million, 6.100% senior unsecured notes due March 15, 2028. The rating Outlook is Stable.

Key Credit Considerations

OTF benefits from its ties to the $128.4 billion Blue Owl Credit platform, with approximately $27 billion deployed into the technology strategy across all funds since inception. The experienced management team that has decades of experience working in the private markets has built a high credit quality direct lending platform to finance mainly sponsor-backed portfolio companies in the upper middle market.

OTF maintains a $6.4 billion diversified investment portfolio with a majority consisting of first lien senior secured loans (69.6%) in technology focused portfolio companies. The company’s traditional financing portfolio, which represented 75.1% of total investments, had a weighted average EBITDA of $201 million and enterprise value of $3.98 billion. OTF’s growth capital portfolio represents 23.9% of its total portfolio and had a weighted average annual revenue of $724 million and enterprise value of $14.80 billion. As of 3Q24, the top three sector exposures by end market were Systems Software (23.9%), Health Care Technology (16.0%), and Application Software (14.0%).

The company has diversified funding sources including a bank revolving credit facility, SPV asset facilities, CLOs, and unsecured notes. Post 3Q24 quarter-end, the SPV Asset Facility was upsized to $700 million from $600 million and the SPV Asset Facility II was upsized to $400 million from $300 million. Gross and Net leverage was 0.84x and 0.78x, respectively, below the target leverage range of 0.9x to 1.25x, which is appropriate given the company’s asset mix with relatively high exposure (approximately 20%) to preferred and common equity, which are more volatile. Asset coverage was 218%, providing a solid cushion. As of 3Q24, the company had adequate liquidity, with ~$763.5 million in available bank lines and $186.5 million in cash set against $605.7 million of unfunded commitments along with $1.2 billion of unsecured notes due within two years. A portion of the unfunded commitments are tied to covenants and transactions and are not expected to be drawn and the issuance will further increase liquidly along with the post 3Q24 quarter end increases in bank credit lines.

Following the Pluralsight LLC restructuring, credit quality is solid with only one portfolio company on non-accrual comprising 0.1% and 0.3% of total investments at FV and cost as of September 30, 2024.

The credit strengths are counterbalanced by the relatively illiquid investments and retained earnings constraints as a RIC. The potential for increased non-accruals with a more uncertain economic environment with high base rates, inflation, and geopolitical risk.

On November 13, 2024, Blue Owl Technology Finance Corp. and Blue Owl Technology Finance Corp. II announced that they entered into a definitive merger agreement, with OTF as the surviving company. The combined company will have approximately $15.8 billion of total assets at FV once all capital is called and the company reaches its target leverage of 0.9x to 1.25x. The expected close of the merger is 2Q25.

Formed in July 2018 as a Maryland Corporation, Blue Owl Technology Finance Corp. (“OTF” or “the company”) is a $6.4 billion (total investments at FV) private, non-diversified, externally managed business development company (“BDC”) operating under the Investment Company Act of 1940 that has elected to be treated as an RIC for tax purposes. OTF is externally managed by Blue Owl Technology Credit Advisors LLC (“the Adviser”). The Adviser is an indirect subsidiary of Blue Owl Capital (NYSE: OWL), a global alternative asset manager with $235 billion of AUM.

Rating Sensitivities

In the intermediate future, a rating upgrade is not expected. A rating downgrade and/or Outlook change to Negative could be considered if there is a significant downturn in the U.S. economy with negative impact on OTF’s earnings performance, asset quality, and leverage. A significant change in senior management and/or risk management policies could also lead to negative rating action.

To access ratings and relevant documents, click here.

Methodologies

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1007536

View source version on businesswire.com: https://www.businesswire.com/news/home/20250113850636/en/

Analytical Contacts

Teri Seelig, Managing Director (Lead Analyst)

+1 646-731-2386

teri.seelig@kbra.com

Kevin Kent, Director

+1 301-960-7045

kevin.kent@kbra.com

Business Development Contact

Constantine Schidlovsky, Senior Director

+1 646-731-1338

constantine.schidlovsky@kbra.com

Source: Kroll Bond Rating Agency, LLC

FAQ

What is the rating assigned by KBRA to Blue Owl Technology Finance Corp.’s notes?

KBRA assigned a BBB rating with a Stable outlook to Blue Owl Technology Finance Corp.’s $650 million senior unsecured notes due March 15, 2028.

What is the current size and composition of OTF’s investment portfolio?

OTF maintains a $6.4 billion diversified investment portfolio, with 69.6% in first lien senior secured loans, 75.1% in traditional financing, and 23.9% in growth capital investments.

What are the key sector exposures in OTF’s portfolio as of Q3 2024?

The top three sector exposures are Systems Software (23.9%), Health Care Technology (16.0%), and Application Software (14.0%).

What is the expected impact of the merger between OTF and Blue Owl Technology Finance Corp. II?

The merger, expected to close in Q2 2025, will create a combined company with approximately $15.8 billion of total assets at fair value once all capital is called and target leverage is reached.