Blue Owl Capital’s Borrowers Average $300 Million in EBITDA

Borrower Size: The Overlooked Variable in Credit Markets

$300 million. That's what James Clarke, Blue Owl Capital's global head of institutional capital, gave as the average annual earnings of the companies his firm lends to when he sat down for a Bloomberg interview earlier this year. Strip away the customary language about "upper middle market lending," and what Clarke was describing is a business with an enterprise value somewhere north of $3 billion, the kind of company where even a sharp operational setback tends to produce a refinancing conversation rather than an immediate default.

"The average businesses we lend to are $300 million in earnings and greater," Clarke said during the interview. "No one talks about that."

He has a reasonable case. Private credit discourse in 2025 and into 2026 concentrated heavily on covenant quality, default event frequencies, and whether certain high-profile borrower failures signaled something systemic. What received considerably less attention was how the size of a borrower, and the corresponding math of where debt sits relative to enterprise value, shapes the actual risk profile of a loan. For Blue Owl, it’s a consideration that may be going overlooked as some have argued that the firm is currently undervalued due to market overreaction.

Borrowed Capital in Context

Assuming a 10x EBITDA multiple, a borrower generating $300 million in EBITDA would carry an enterprise value of roughly $3 billion. On that assumption, a 40% loan-to-value ratio debt position would be somewhere $1.2 billion, leaving roughly $1.8 billion of equity beneath it. This kind of ration means a significant amount of value has to disappear before the lender takes a principal loss.

In some parts of Blue Owl’s portfolio, the math is more conservative still. Blue Owl's technology portfolio operated at loan-to-value ratios of approximately 30% as of year-end 2025, with 90% of those exposures in first-lien senior secured loans, according to disclosures from the firm's fourth-quarter earnings call.

There is a contrast with public equity markets here. Software stocks can lose 30% or 40% of their value in weeks on revised earnings guidance. A senior secured loan at roughly 30% LTV to a similar company is not exposed in the same way, because a substantial equity cushion sits beneath the debt in the capital structure.

The Moody's Upgrade as External Validation

On January 22, 2026, Moody’s Ratings upgraded Blue Owl Capital Corporation (OBDC), the firm's flagship publicly traded business development company, to Baa2 from Baa3, shifting its outlook to stable. Moody's simultaneously upgraded Blue Owl Credit Income Corp. (OCIC) to the same rating.

Moody’s cited OBDC's annual net loss rate of 27 basis points since the fund's April 2016 inception, a nine-year track record that spans multiple rate cycles, a global pandemic, a period of sharp rate increases, and subsequent easing. OCIC and the broader Blue Owl direct lending platform posted an even lower figure: 7 basis points annualized over the same period. Moody's acknowledged that neither window includes a deep, sustained recession, but concluded the track record was sufficient to demonstrate that the structural approach, combined with modest leverage levels, should protect creditors from losses.

That's a careful statement from a rating agency that doesn't traffic in easy optimism. Moody's was saying the evidence supports the thesis that large borrowers in senior positions at low LTVs produce loss profiles meaningfully different from the broader BDC universe.

Craig Packer, OBDC's chief executive, addressed the upgrade during the firm's fourth-quarter earnings call: "This ratings upgrade was a reflection of our strong portfolio and liability management capabilities and our long-term track record of disciplined underwriting and solid credit performance."

The upgrade placed OBDC in a small group of BDCs at that rating level. Packer noted it could improve the firm's execution on future unsecured debt issuance by reducing borrowing costs at a time when spread compression is already pressuring net investment income.

Blue Owl Capital’s Fourth Quarter 2025

Blue Owl Capital Corporation closed 2025 with 234 portfolio companies across 30 industries, carrying an aggregate portfolio of $16.5 billion at fair value. Net asset value per share came in at $14.81, down modestly from $14.89 at the end of the third quarter, driven primarily by credit-related markdowns on a small number of names and partially offset by share repurchases. Investments on non-accrual represented 2.3% of the portfolio at cost and 1.1% at fair value, both figures declining from 2.7% and 1.3%, respectively, at the end of September.

GAAP net investment income per share reached $0.38 for the quarter. The board declared a $0.37 per-share dividend, representing an annualized yield of 10%.

"OBDC closed the year with strong fourth quarter earnings and credit performance, reflecting the health of our borrowers and our defensive, senior secured strategy focused on the upper middle market," said Packer in the Q4 earnings call.

Across the entire OBDC portfolio, revenue grew 8% year over year in the fourth quarter and EBITDA grew 11%, both metrics accelerating compared with 2024. For software borrowers specifically, trailing-12-month figures through December showed 10% revenue growth and 16% EBITDA growth.

These are operating results from companies in Blue Owl’s lending portfolio, not public comparables or sector benchmarks. A credit portfolio with disciplined LTVs can behave differently in stressed environments because more equity sits beneath the debt. When borrower performance improves, that cushion can strengthen further.

Borrower Scale as Underwriting Logic

The $300 million EBITDA threshold Clarke described has structural consequences. Moody's data on the two flagship BDCs illustrates the range: OBDC's borrowers carried a weighted average EBITDA of $229 million as of September 30, 2025, while OCIC's borrowers averaged $296 million over the same period. Both figures sit well above the conventional definition of middle-market lending, which typically targets companies with $25 million to $100 million in annual earnings.

Larger borrowers bring a different default profile. They tend to carry more diversified revenue streams, more established relationships with capital markets, and access to refinancing channels that smaller companies simply don't have. That doesn't make them immune to credit stress. When they encounter it, the path through is usually longer and more negotiable, which gives a senior secured lender more time to act, restructure, or recover value.

Moody's made a related point. While upper-middle-market loans are frequently covenant-lite, "they are generally made to more well-established companies with less concentration risk." The absence of maintenance covenants is often cited as a vulnerability in direct lending. For large, well-capitalized borrowers, the better framing may be that the lender is accepting fewer early-warning triggers in exchange for lending to companies that need them less.

OBDC's portfolio reflected this: as of September 30, 2025, 74% of investments at fair value were in first-lien and unitranche loans. OCIC's first-lien concentration was higher still, at 88% . Structural seniority amplifies the LTV protection. Being first in line to recover matters as much as how far down the capital stack the debt sits.

A Single Variable, Chronically Underweighted

Private credit analysis tends to be sector-forward: technology exposure, healthcare concentration, cyclical industries as a share of the portfolio. But overfocus on sectors can obscure the more fundamental question of where in the capital structure a lender sits and how much equity cushion lies beneath it.

If a fund is lending to companies with $300 million in EBITDA at 30-40% LTV, the relevant question of what sectors those companies operate is of course important, but so is how far the enterprise value would have to fall before the lender loses a dollar. Credit performance tends to live in the margins.

Keep Reading: Blue Owl Capital Surpasses $300 Billion in Assets, Reports Record Fundraising Year

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