Owl Rock Capital Corp.'s Proposed Senior Unsecured Notes Due 2024 Rated 'BBB-'


NEW YORK (S&P Global Ratings) April 3, 2019--S&P Global Ratings today said it 
assigned its 'BBB-' debt rating on Owl Rock Capital Corp.'s (ORCC) proposed 
$300 million issuance of senior unsecured notes due 2024. Owl Rock expects to 
use proceeds from this offering to pay down existing indebtedness, including a 
portion of borrowings under its subscription credit facility.

The ratings reflect ORCC's low leverage, substantial committed capital, and 
experienced management team. Debt to adjusted total equity (ATE) was 0.80x as 
of Dec. 31, 2018, and management is targeting leverage of 0.75x debt to 
equity. As of Dec. 31, 2018, ORCC had $5.5 billion in total capital 
commitments from investors, of which $2.4 billion was unfunded. Since the 
start of 2019, the company has delivered additional capital drawdown notices 
to investors totaling $750 million. Management is highly experienced in 
leveraged finance and has established an institutional quality business 
development company (BDC) with strong origination capabilities. Partially 
offsetting these strengths are ORCC's concentration in leveraged lending to 
middle-market companies, like other BDCs, and its limited operating history 
and rapid growth in the highly competitive middle-market lending environment. 
Favorably, 79% of ORCC's investment portfolio consists of first-lien loans, 
with limited exposure to last-out tranches or loans that could be considered 
unitranche.

Over the next 12 months, S&P Global Ratings expects ORCC will continue to grow 
its investment portfolio by about $500 million per quarter (net of repayments) 
but maintain its underwriting discipline and continue to focus on 
upper-middle-market sponsor-backed companies. We expect ORCC will maintain 
debt to equity of about 0.75x and do not expect it to seek approval to reduce 
its asset coverage limit pursuant to the Small Business Credit Availability 
Act.

An upgrade is not likely in the next 12 months given the relatively short 
operating history of ORCC and the currently high level of competition in 
middle-market lending. Longer term, an upgrade likely would be predicated on 
maintaining debt to ATE under 1.0x, investment portfolio performance 
consistent with investment-grade peers, and more diversified debt funding, 
particularly unsecured debt funding.

We could lower the ratings if debt to ATE rises above 1.0x or the investment 
portfolio underperforms peers in terms of realized and unrealized losses and 
nonaccrual loans. Also, we likely would lower the ratings if ORCC were to seek 
approval to reduce its asset coverage limit pursuant to the Small Business 
Credit Availability Act.
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