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Owl Rock Capital (ORCC) Offers Notes Worth $1B to Lower Debt

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Owl Rock Capital Corporation (ORCC - Free Report) recently announced the pricing of $1 billion aggregate principal amount of notes. The notes carry an interest rate of 3.4% and are scheduled to mature on Jul 15, 2026. Subject to customary closing conditions, the notes offering is likely to be completed on Dec 8, 2020.

The same may be redeemed fully or in part according to the company's option at any time on par plus a "make-whole" premium, if applicable.

Owl Rock Capital expects to reduce its debt burden by paying down the current debt under its revolving credit facility, which matures on Sep 3, 2025 with respect to $1.295 billion of commitments and on Apr 2, 2024, related to the rest of the commitments, and for general corporate purposes. The company has been steadily issuing senior notes to enhance its financial flexibility without affecting its liquidity position, which only proves its financial prudence. By capitalizing on the low interest rate environment triggered by the COVID-19 pandemic, the company is attempting to lower its interest burden, thereby aiding margin expansion.

As a case in point, in July this year, the company had priced $500 million 4.25% senior notes, scheduled to mature in 2026, with the intension to utilize the proceeds for decreasing its indebtedness under the SPV Asset Facility III, which matures on Dec14, 2023.

The solvency position of this specialty finance company also impresses. Total debt of the company accounts for 43.1% (in line sequentially) of its capital, lower than the industry average of 59.2%. The company doesn’t have any debt maturities until June 2023.

Zacks Rank and Price Performance

Shares of this currently Zacks Rank #4 (Sell) company have lost 25.3% in the past year, wider than the industry’s decline of 19%.


Other companies in the same space, such as TCG BDC, Inc. (CGBD - Free Report) and FEDNAT HOLDING CO (FNHC - Free Report) have also decreased 17.9% and 63.5%, respectively, while Moodys Corporation (MCO - Free Report) has gained 23.9% over the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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