BDC Quarterly Analysis: Blue Owl Capital Corp. Nonaccruals Fall to 1.1% at Fair Value; Participates in $1.4B Blue Owl BDC Asset Sale at 99.7% of Book

Credit Research: Michael Soricillo Yesterday, Feb. 19, Blue Owl Capital Corp. reported that investment income increased $53.4 million year over year in the fourth quarter of 2025 to $447.8 million, primarily driven by the volume increase from the Blue Owl Capital Corp. III, or OBDE, merger that closed on Jan. 13, 2025. The merger added $4.2 billion of investments, expanding the portfolio to $17.7 billion from $13.2 billion, a 34% increase in the asset base that, holding the prior yield constant at 12%, would have contributed approximately $100 million of additional quarterly income on a full-quarter basis. However, the merger closed mid-January, reducing the actual contribution pro rata, which was further offset by meaningful yield compression. The reported portfolio yield declined 100 bps, from 12% to 11%, over the same period. This reflected the floating-rate nature of the portfolio, representing 96% to 97% of debt investments, and the broader rate decline through 2025. This yield headwind offset approximately $41 million of the benefit from the merger. The portfolio has been shrinking through net repayments since the second quarter of 2025 as the company deleverages post-merger and rate pressure continues. Quarterly investment income has already declined from its first-quarter 2025 peak[...]