KBRA Comments on Blue Owl Capital Corporation II's Asset Sales

NEW YORK--(BUSINESS WIRE)--On February 17, 2026, Blue Owl Capital Corp. II (“OBDC II” or “the company”) (KBRA Issuer/ Senior Unsecured Debt ratings of BBB+/Stable outlook) filed a Form 8-K disclosing entry into loan sale agreements totaling $600 million at 99.7% of par including unfunded commitments. The transactions are expected to generate approximately $538 million of proceeds after fees, which the company intends to use to repay secured debt and to distribute approximately 30% of total net assets to shareholders on a pro-rata basis. OBDC II’s direct lending investment sales are part of Blue Owl's broader $1.4 billion asset sale to institutional investors, including public pension plans and insurance companies. The broader transaction also includes assets from Blue Owl Capital Corporation (KBRA Issuer/ Senior Unsecured Debt ratings of BBB+/Stable) and Blue Owl Technology Income Corp. (KBRA Issuer/ Senior Unsecured Debt ratings of BBB/Stable).

As of 3Q25 OBDC II reported a relatively conservative gross leverage ratio of 0.83x. On a pro forma basis, leverage is expected to decline materially to approximately 0.53x following repayment of the secured debt and the capital distribution. The reduction in senior secured debt releases encumbered collateral and enhances financial flexibility for the benefit of the unsecured noteholders. As of 3Q25, the company had $350 million of senior unsecured notes maturing in November 2026. The anticipated deleveraging positions the Company to address the upcoming maturity with improved balance sheet flexibility, notably assets at fair value equal more than 3 times total debt outstanding on a pro-forma basis.

The asset sales represent approximately 34.9% of OBDC II's total investments at FV (excluding unfunded committed investments) and consist of a diverse pool of partial sales of 96 portfolio companies across 25 industries. These investments consist 92% of senior secured first lien investments, 4.5% senior secured second lien investments and 3.5% unsecured investments. The settlement is expected to be completed in the first quarter of 2026. In KBRA’s view, this large-scale sale of generally illiquid loans at cost demonstrates Blue Owl’s ability to value these assets appropriately.

OBDC II is a private non-traded business development company (BDC) formed in October 2015 as a Maryland Corporation and commenced investment operations in 2017. The company was structured with the objective of providing a liquidity event for shareholders, which may include a sale, merger, sale of all or substantially all assets or listing of shares on a national securities exchange. The Board continues to evaluate potential liquidity alternatives. KBRA views the announced transactions as consistent with the company’s long term objective of providing a liquidity event for shareholders.

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