Oaktree BDC Avoids Proration in Q2 as Demand Eases to 4.5%

Oaktree Strategic Credit Fund received tender requests for approximately 4.5% of shares outstanding in its second-quarter repurchase offer, coming in below the fund’s standard 5% quarterly limit and allowing the nontraded business development company to honor all requests in full without proration or an affiliate purchase.

The offer, which launched May 15 and expired June 12, covered up to 9.8 million shares – equal to 5% of shares outstanding as of March 31, 2026, according to the company. Approximately 8.9 million shares were validly tendered. The repurchase price will be set at the fund’s net asset value as of June 30, 2026, and disclosed in August.

The result marks a reversal from the first quarter, when redemption demand at the fund exceeded the 5% cap and required Oaktree to expand the offer to 7% and enlist an affiliate purchase to avoid proration. That quarter, approximately 13.9 million shares – equal to 6.8% of outstanding – were tendered, and Brookfield OSCF Investor LLC, an affiliate of Oaktree Fund Advisors, purchased a portion of one investor’s holdings at NAV through a promissory note to absorb the overage. The fund paid approximately $310 million in Q1 2026 redemptions in total.

The Q2 demand of 4.5% also falls below the Q4 2025 level of 4.2%, which was the last quarter demand came in within the standard cap before the Q1 blowout.

In a shareholder update, Oaktree said the fund has fully satisfied every tender offer since it launched in June 2022. The fund reported an 8.79% annualized total net return for Class I shares over three years, non-accrual investments of less than one basis point of fair value as of March 31, and a leverage ratio of 0.63 times net-debt-to-equity as of April 30.

The second-quarter result arrives against a backdrop of sustained redemption pressure across the nontraded BDC sector. Publicly registered nontraded BDCs saw outflows exceed inflows for the first time in Q1 2026, with gross sales of $4.9 billion running well below $6.9 billion in redemptions, according to Robert A. Stanger & Company. Stanger has projected a roughly 40% year-over-year decline in nontraded BDC capital formation for 2026 and has characterized the pattern as an early-stage liquidity cycle comparable to the one that reshaped the nontraded REIT market beginning in 2022.

Among large peers, Blackstone Private Credit Fund announced in early June that it expects to prorate its Q2 tender after demand reached 10%, holding its 5% cap after upsizing to 7% in the first quarter. Golub Capital Private Credit Fund disclosed Q2 demand of 8.5% and said it would fulfill requests only up to its 5% limit. In that context, Oaktree’s sub-cap Q2 2026 result stands as one of the cleaner outcomes among the larger publicly registered nontraded BDCs this quarter.

Oaktree Strategic Credit Fund is advised by Oaktree Fund Advisors LLC and distributed through Brookfield Private Wealth LLC. As of March 31, the fund’s aggregate NAV was approximately $4.4 billion, with a fair-value investment portfolio of approximately $7 billion.

The fund cut its monthly distribution from $0.18 to $0.16 per share in March, an 11.1% reduction it attributed to lower leverage, higher liquidity reserves, and the impact of tighter credit spreads on income. At the $0.16 monthly rate and a March 31 Class I NAV of $22.38 per share, the fund’s implied annualized net distribution rate is approximately 8.58%.

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