KBRA Assigns BBB Rating to Owl Rock Capital Corporation II’s $300 Million Sr. Unsecured 4.625% Notes due 2024

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Kroll Bond Rating Agency (KBRA) assigns a BBB rating with a Stable Outlook to Owl Rock Capital Corporation II’s (“ORCC II” or “the Company”) $300 million senior unsecured 4.625% notes due 2024 (“Notes”). The Company expects to use the proceeds to paydown a portion of its outstanding bank loans and for general corporate purposes. The Notes rank equally with existing and future senior unsecured notes issued by ORCC II.

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 19.3% 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 LP, 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 rating reflects 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 secured funding profile. The Company’s unsecured debt issuance supports 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 as of September 30, 2019. 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 $1.5 billion (matures 2024) for a maximum raise of approximately $2.5 billion. The investment platform was founded by Douglas Ostrover, Marc Lipschultz, and Craig Packer, all veterans of the industry.

The ratings assigned using KBRA’s Global Finance Company Rating Methodology, published November 28, 2017.

To view the report, click here.

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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Business Wire: 21:24 GMT Tuesday 3rd December 2019

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