Blue Owl Estimates 1.8x Interest Coverage Under Another 100-Basis-Point Rate Increase

Blue Owl Capital Corporation management estimated portfolio companies would have about 1.8 times interest coverage after another 100-basis-point rate increase, as loan resets move through its U.S. middle-market portfolio.

Management expects wider lending spreads and loan resets to support results. It reported no new nonaccrual issuers and identified credit selection as the portfolio’s main risk. Lower rates or a reversal in spreads could weigh on earnings.

The specialty finance company lends to U.S. middle-market businesses. It generated adjusted net investment income of $0.33 per share in the third quarter, covering its $0.31 base dividend.