NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns issuer and senior unsecured debt ratings of BBB to Owl Rock Capital Corporation II (“ORCC II” or “the Company”). The Outlook is Stable.
Owl Rock Capital Corporation II is a non-traded business development company (BDC) that specializes in providing capital in the form of senior secured first lien, unitranche and second lien debt to private middle market companies. As of September 30, 2019, ORCC II had $1.28 billion of total investments comprised of 80.5% first lien senior secured loans and 19% in second lien loans across 86 portfolio companies. Only 0.2% comprised equity investments and there were no unsecured debt investments in the portfolio.
The Company is externally managed by Owl Rock Capital Advisors LLC, an affiliate of Owl Rock Capital Partners, which together with its subsidiaries is a $14.6 billion New York based direct lending investment platform. ORCC II maintains the same investment strategy as Owl Rock Capital Corp. (ORCC, KBRA: ‘BBB’), a publicly traded BDC with approximately $8.3 billion of investments as of September 30, 2019. Both BDCs share the same solid management committee, origination team and strong risk management and invest in almost identical debt investments but on scales commensurate with their respective asset sizes.
The BBB issuer and senior unsecured debt ratings reflect Owl Rock Capital Corporation II’s senior management’s decades of experience in leverage finance with strong risk management practices, a shared $14.6 billion platform with Owl Rock Capital Corp., appropriate leverage metrics, which are restricted by BDC requirements (1:1) and an $1.28 billion investment portfolio comprised mostly of first lien secured investments. The Company has not sought unitholder approval to increase its leverage as permissible under the SBCAA which was enacted in March 2018. ORCC II’s leverage was conservative at 0.64 times as of September 30, 2019 and is expected to remain within the Company’s targeted 0.75 times. The Company’s strengths are counterbalanced by ORCC II’s limited operating history, illiquid investments and the Company’s fully secured funding profile. The Company’s proposed unsecured debt offering will support a more diversified funding profile.
The Company was formed in October 2015, the same time as ORCC, as a Maryland Corporation, raising roughly $800 million of equity. ORCC II began investing in 2017 ending the year with roughly $66 million in total investments. The Company has recently filed for a 3-year extension to issue additional equity totaling $2.5 billion (matures 2024). The investment platform was founded by Douglas Ostrover, Marc Lipschultz, and Craig Packer, all veterans of the industry.
The ratings are assigned using KBRA’s Global Finance Company Rating Methodology, published November 28, 2017.
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