Price discovery

Interesting developments in the Private Credit space. Investors in Blue Owl Capital Corp. II (OBDC II), a non-traded business development company (BDC) managed by Blue Owl Capital Inc., largely rejected a tender offer from Boaz Weinstein’s Saba Capital Management and partner Cox Capital Partners. Less than 1% of shares were tendered when the offer expired at the end of last week. The offer was tendered for 8 million shares or 6.9% of the outstanding, with a discount of (drumroll) 35% below the latest NAV. This transaction tells us that the initial stress may have calmed down, but it has provided a fire sale price for private credit loans, particularly for those in the software sector (look at the chart below). This mark is the latest independent data point we have about the value of those loans. Current investors have decided that waiting is a better alternative than selling at a distressed price. But history tells us that if there is another round of tender offers, the marks will be lower. Investors are betting the economy will do ok, interests might go down, lifting stress on the issuers, and loans will keep performing. Activists bet is they will not, and are putting the marks on the recovery value. Price discovery in action.

Want to know more? You can register for free at Fund@mental.

#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning #policymistake #ratecut #stagflation