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Owl Rock Capital (ORCC) Offers Notes Worth $450 Million

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Owl Rock Capital Corporation recently announced the pricing of its notes, carrying an interest rate of 2.875%. Subject to certain closing conditions, the public offering of worth $450 million notes will mature on Jun 11, 2028.

The net proceeds of the issuance of these notes will be used in clearing debt obligations including the amount under the Revolving Credit Facility due Sep 3, 2025 with respect to $1.295 billion of commitments. The remainder will be used in redeeming all the company’s pending debt that matures on Apr 2, 2024 in relation to its remaining commitments along with the Special Purpose Vehicle (SPV) Asset Facility IV, which matures on Aug 2, 2029.

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.

However, its times interest earned stands at 4.4X, way lower than the industry’s average of 37.2X. Its total debt to equity stands at 95.6%, higher than the industry's average of 84.6%. The company’s total liquidity of $2.5 billion is significantly lower than its long-term debt of $5.5 billion.
Nevertheless, it takes measures to enhance its financial flexibility without affecting its liquidity position.

Other factors, such as its strong portfolio, growing top line on the back of interest income, inorganic growth initiatives and capital deployment poise this Zacks Rank #3 (Hold) company well for growth.

Shares of Owl Rock Capital have gained 10.9% in the past year against its  industry’s decline of 2.6%.

Zacks Investment ResearchImage Source: Zacks Investment Research

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