Key Takeaways
- • Blue Owl Capital expects lending opportunities in AI infrastructure to become more attractive as tighter financing conditions push borrowing spreads higher, according to a Bloomberg report following third-quarter earnings calls.
- • Erik Bissonnette, president of Blue Owl Technology Finance Corp (OTF), said constraints on new computing capacity following the US midterm elections could widen lending spreads even as underlying AI infrastructure demand remains strong.
- • OTF reportedly plans to lift compute-related financing exposure from approximately 2% of its portfolio to the high single digits.
- • Blue Owl, which manages approximately $330bn, closed a $2.4bn financing for AI infrastructure provider Iren, OTF's largest new investment in the third quarter.
- • Blue Owl said it exited $1bn of investments from Blue Owl Capital Corp II this year, with every loan sold at or above carrying value.
Summary
Blue Owl Capital expects lending opportunities in AI infrastructure to become more attractive as tighter financing conditions push borrowing spreads higher, according to a Bloomberg report citing comments from executives during the firm's third-quarter earnings calls.
Erik Bissonnette, president of Blue Owl Technology Finance Corp (OTF), said constraints on new computing capacity following the US midterm elections could widen lending spreads, even though underlying demand for AI infrastructure remains strong. The firm reportedly expects to increase its exposure to compute-related financing from approximately 2% of OTF's portfolio to the high single digits.
Blue Owl, which manages approximately $330bn, has become a significant provider of financing for AI infrastructure, including data centres and computing equipment. Its recent transactions include a $2.4bn financing for AI infrastructure provider Iren, which represented OTF's largest new investment during the third quarter. The firm reportedly said its lending strategy prioritises short-duration debt backed by contractual cash flows rather than the residual value of computing equipment.
Separately, Blue Owl sought to address concerns over private credit valuations and loan quality. The firm said it had exited $1bn of investments from Blue Owl Capital Corp II this year, with every loan sold at or above its carrying value. Executives also highlighted improving opportunities in upper-middle-market direct lending, as outflows from non-traded funds create a more favourable environment for lenders with permanent capital.
Erik Bissonnette, president of Blue Owl Technology Finance Corp (OTF), said constraints on new computing capacity following the US midterm elections could widen lending spreads, even though underlying demand for AI infrastructure remains strong. The firm reportedly expects to increase its exposure to compute-related financing from approximately 2% of OTF's portfolio to the high single digits.
Blue Owl, which manages approximately $330bn, has become a significant provider of financing for AI infrastructure, including data centres and computing equipment. Its recent transactions include a $2.4bn financing for AI infrastructure provider Iren, which represented OTF's largest new investment during the third quarter. The firm reportedly said its lending strategy prioritises short-duration debt backed by contractual cash flows rather than the residual value of computing equipment.
Separately, Blue Owl sought to address concerns over private credit valuations and loan quality. The firm said it had exited $1bn of investments from Blue Owl Capital Corp II this year, with every loan sold at or above its carrying value. Executives also highlighted improving opportunities in upper-middle-market direct lending, as outflows from non-traded funds create a more favourable environment for lenders with permanent capital.
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