Blue Owl Capital Corporation

Good morning, everyone, and welcome to the Blue Owl Capital Corporation's third quarter 2026 earnings call. As a reminder, this call is being recorded. At this time, I'd like to turn the call over to Mike Mosticchio, head of BDC Investor Relations. Mike, please go ahead.

Thank you, operator, and welcome to Blue Owl Capital Corporation's third quarter 2026 earnings conference call. Joining me today are Craig Packer, Chief Executive Officer, Logan Nicholson, President, and Jonathan Lam, Chief Financial Officer. I'd like to remind listeners that remarks made during today's call may contain forward-looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties that are outside of the company's control. Actual results may differ materially from those in forward-looking statements as a result of a number of factors, including those described in OBDC's filings with the SEC. The company assumes no obligation to update any forward-looking statements. We would also like to remind everyone that we will refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our earnings presentation available on the events and presentation section of our website. Certain information discussed on this call and in the company's earnings materials, including information related to portfolio companies, was derived from third-party sources and has not been independently verified. The company makes no such representations or warranties with respect to this information. Yesterday, OBDC issued its financial results for the third quarter ended September 30, 2026, reporting adjusted net investment income of $0.33 per share and an asset value of $14.32 per share. All materials referenced during today's call, including the earnings press release, earnings presentation, and 10-Q, are available on the news and events section of OBDC's website. With that, I'll turn the call over to Craig.

Thanks, Mike, and good morning, everyone. Thank you for joining us today. We are very pleased with this quarter's results. Earnings more than covered the dividend, NAV is up, our borrowers continue to perform well, and our balance sheet remains healthy. In the third quarter, OBDC generated adjusted net investment income of 33 cents per share that comfortably covered our base dividend of 31 cents per share, and resulted in an annualized ROE of approximately 9.2%. Based on these results, we also declared a supplemental dividend of one cent per share consistent with our framework that allows shareholders to benefit from earnings in excess of our base dividend. That asset value per share was up modestly at the end of the quarter to $14.32 from $14.26. The improvement in market sentiment drove tighter spreads and higher portfolio marks while credit quality remained strong, including across our software borrowers. Importantly, there were no new issuers added to non-accrual this quarter. Together, our earnings and growth in NAV resulted in a net income ROE of 10.3%. We continued to repurchase shares during the quarter, buying back $35 million in stock, which was accretive to NAV per share and bringing our total repurchases over the past year to $254 million. We remain focused on deploying capital where we see the greatest opportunity to drive value for our shareholders, thoughtfully balancing the accretive impact of share repurchases with attractive new investment opportunities. Turning to the market environment, the stabilization in direct lending that we described last quarter is starting to be reflected in valuations, NAV stability, and earnings. While deal activity remained relatively light during the quarter, we continue to benefit from improved market economics as deployment modestly increased. Weighted average spreads on new investment commitments increased from last quarter, while our scaled portfolio continued to generate attractive opportunities through incumbent borrowers. Looking at the rate environment, the Fed raised rates by 25 basis points in September, its first increase since 2023, and the forward curve now points to a higher for longer environment. Given the predominantly floating rate nature of our portfolio, These higher rates should be a net benefit to our earnings as these loans reset. For our borrowers, we believe the impact of higher debt service costs is very manageable. Rates were more than 100 basis points higher just two years ago, and the portfolio at that time performed well throughout the period. Importantly, we continue to see strong credit quality and portfolio performance even through the volatility this year. We diligently monitor for early signs of credit stress, which remain very limited across the portfolio. In fact, several of our existing watch list names we have been following most closely showed modest improvement in operating performance, which is encouraging at a time when we are seeing greater dispersion in credit performance across the broader industry. That performance reinforces our conviction that disciplined underwriting, thoughtful portfolio construction, and the depth of our team remain critical differentiators. Thanks, Craig. Starting with investment activity, regular way sponsored deal flow continues to remain below historical levels.