Blue Owl Technology Finance Corp. (NYSE: OTF) reported stable net asset value per share of $16.48 and adjusted net investment income of $0.30 per share for the second quarter ended June 30, 2026.

The business development company maintained strong credit quality with non-accruals at just 10 basis points, while executing significant capital deployment and balance sheet optimization during the quarter.

Financial Performance

Management declared a third-quarter base dividend of $0.35 per share, consistent with the previous quarter. This is payable on or before October 15 to shareholders of record as of September 30. Additionally, the company will pay the final quarterly special dividend of $0.05 per share, supported by spillover income from portfolio gains of $0.32 as of quarter end. Total dividends for the quarter amount to $0.40 per share.

Net leverage stood at 0.93 times, reflecting over $475 million in net funded investment activity. With leverage at the lower end of the target range of 0.9 to 1.25 times, management indicated a clear path toward covering the base dividend by the middle of next year.

Portfolio Activity & Credit Quality

During the quarter, Blue Owl Technology made approximately $850 million in new commitments and funded $550 million. The company received approximately $222 million in sales and repayments. Software exposure represents approximately 70% of the portfolio, with borrowers generating high single-digit revenue and EBITDA growth.

Credit quality remained resilient. Non-accruals totaled just $20 million, or 10 basis points of the portfolio at fair value. Over 80% of the portfolio consisted of senior secured loans, with a weighted average loan-to-value ratio steady at 40%. Internal ratings showed broad stability, with three-to-five rated names modestly declining to 7.6% at fair value from 8.5% last quarter.

Capital Structure & Liquidity

The company strengthened its capital structure by issuing a $500 million unsecured bond and adding $150 million in secured financing. It also completed an amend-and-extend of its $2.7 billion revolving credit facility. All existing bank partners renewed their revolver commitments, and a new lending relationship was added. Consequently, all 2026 maturities have been addressed, and all credit agencies affirmed OTF’s investment-grade ratings.

Liquidity remains substantial, with over $2 billion in total cash and available capacity across credit facilities. The company repurchased over $55 million of stock during the quarter, bringing total repurchases over the past three quarters to roughly $170 million. Approximately $195 million remains available under the $300 million share repurchase program authorized by the Board in February.

What the Numbers Show

A notable divergence exists between market valuation and underlying asset performance. Management highlighted that the current trading discount implies nearly $3 billion of credit losses, effectively pricing in a scenario where approximately 40% of the portfolio defaults with recoveries of only $0.50 on the dollar. This stands in contrast to actual performance, where non-accruals remain at just 10 basis points ($20 million), suggesting the market has not yet fully reflected the portfolio's credit resilience and earnings momentum.

Blue Owl Technology Finance Corp. (NYSE: OTF) closed a $150 million private placement of senior unsecured notes on Sept. 4, 2026. The issuance comes as the company’s shares have declined 21% year-to-date, reflecting broader investor caution in private credit.

The notes carry a coupon rate of 7.60% and mature on Sept. 3, 2032. Bloomberg-compiled data indicates this is the highest yield for any bonds issued by OTF since September 2023, when it priced a $75 million private placement at an 8.5% yield. RBC, SMBC, ING Groep NV, Mizuho Financial Group and Societe Generale SA managed the transaction.

Funding Activity Since June

This issuance represents the third financing event for OTF since June 30, 2026. The company has raised a total of $800 million in debt capital during this period through various instruments.

In addition to these recent transactions, OTF issued $500 million of its 6.500% notes due 2029 during the second quarter. The company also added $150 million in secured financing and extended its $2.7 billion revolving credit facility.

Market Context and Credit Performance

Private credit has faced pressure this year as investors raise concerns regarding lenders’ underwriting practices and exposure to software companies potentially disrupted by artificial intelligence advances. Despite the fundraising activity, OTF’s stock performance has lagged.

Credit performance weakened slightly in the second quarter. Non-accrual investments, categorized as borrowers who have stopped making scheduled payments, rose to 0.6% of the portfolio at cost, up from 0.3% in the prior quarter. Craig W. Packer, Chief Executive Officer, noted that the portfolio continues to perform well with one of the lowest non-accrual rates in the BDC sector.

"We have raised $800 million of debt financing since quarter-end through unsecured notes and an SPV facility, which further strengthens and diversifies our funding base," Packer said. "This added flexibility positions us to grow the portfolio and capitalize on an increasingly attractive environment for technology investing while maintaining our underwriting discipline."

Every existing bank partner renewed its revolver commitment during the second quarter. OTF also added a new lending relationship that provided incremental financing capacity. As of the end of the quarter, the company held more than $2 billion in cash and available capacity across its credit facilities. It also repaid its notes due June 2026 at maturity.

What the Numbers Show

The divergence between aggressive debt fundraising and equity performance highlights shifting investor sentiment. While OTF successfully tapped debt markets for $800 million in two months, the rising cost of capital—evident in the 7.60% coupon compared to earlier issuances—suggests tighter conditions. Simultaneously, the doubling of non-accruals from 0.3% to 0.6% signals emerging credit stress, even if absolute levels remain low relative to sector peers.

About Blue Owl Technology Finance Corp.

Blue Owl Technology Finance Corp. is a specialty finance company focused on making debt and equity investments in U.S. technology-related companies, with a strategic focus on software. As of June 30, 2026, OTF had investments in 205 portfolio companies with an aggregate fair value of $14.7 billion. The company is regulated as a business development company under the Investment Company Act of 1940. It is externally managed by Blue Owl Technology Credit Advisors LLC, an SEC-registered investment adviser and indirect affiliate of Blue Owl Capital Inc. (NYSE: OWL).