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 port by Bloomberg.

The notes carry a 7.6% coupon and mature in September 2032, according to the fund. The transaction marks OTF’s third debt financing since June and takes the total debt capital raised by the vehicle since the end of the second quarter to $800 million.

The latest notes carry OTF’s highest coupon on a bond issuance since September 2023, when the fund placed $75m of notes at a yield of 8.5%.

OTF raised $400m through a separate issuance of 6.5% notes due in 2029 in August. It also secured a further $250m through a special-purpose vehicle facility backed by a portfolio of its investments.

The additional funding gives OTF greater capacity to deploy capital into technology-related private credit opportunities at a time when the sector is navigating heightened investor scrutiny.

Blue Owl chief executive Craig Packer said the expanded financing flexibility would allow the fund to grow its portfolio and take advantage of what the firm views as an increasingly attractive environment for technology investing.

The fundraising comes against a challenging backdrop for technology-focused private credit. Investors have become more cautious about the sector amid concerns over lending standards and the potential for artificial intelligence to disrupt software businesses that form a significant part of private credit portfolios.

OTF has sought to support its share price through stock buybacks, while management has indicated that its borrowers have so far shown limited evidence of material AI-related disruption.

Despite a partial recovery since early August, OTF shares remain around 21% lower for the year.

Credit performance has also come under closer scrutiny. Non-accruals — loans on which borrowers have stopped making payments — increased during the second quarter to 0.6% of the portfolio at cost, compared with 0.3% in the previous period.

At the same time, OTF has maintained substantial liquidity. The fund extended its $2.7bn revolving credit facility during the second quarter, with all of its existing bank partners renewing their commitments.

It ended the period with more than $2bn in cash and available borrowing capacity across its credit facilities, providing significant room to fund new investments and manage existing portfolio commitments.