Corrects headline, paragraphs 1 and 2 to show one fund cut its dividend, not two

By Matt Tracy and Isla Binnie

May 6 (Reuters) - A Blue Owl Capital OWL.N publicly traded private credit fund cut its dividend on Wednesday as it reported a decrease in net asset value per share in the first quarter, a move the firm attributed to higher borrowing costs.

Blue Owl Capital Corp OBDC.K said in a filing it was reducing its dividend to 31 cents per share from 36 cents per share. Another fund, Blue Owl Technology Finance Corp OTF.N declared a 35 cent per share dividend plus an additional five cent per share special dividend, matching the previous quarter.

The two funds bought back a combined $85 million of their own stock in the first quarter, they said.

Blue Owl Capital Corp's net asset value (NAV) per share dropped 2.7% to $14.41 in the first quarter, while Blue Owl Technology Finance Corp's NAV per share fell 4.8% to $16.49 per share, according to their filings.

Both funds have traded down over the past year along with many similar funds as jitters grew around private credit. Blue Owl Capital Corp was the focus of investor concern last year when Blue Owl proposed merging a smaller, non-traded fund into the vehicle. Blue Owl Technology Finance Corp was designed to invest in software, a sector that has been buffeted by fears of disruption from artificial intelligence.

In February, Blue Owl sold a $1.4 billion portfolio of senior secured loans to boost liquidity in its Blue Owl Capital Corp II fund after elevated investor redemption requests.

"The quarter reflected a more challenging earnings environment driven by lower base rates and tighter spreads," the fund's CEO, Craig Packer, said in a statement. But, he added, "our portfolio is delivering solid performance, and our balance sheet is strong."

The filings showed the rate of investments on non-accrual, meaning they have missed repayments or are unlikely to be repaid, dipped from the last quarter.

Blue Owl Capital Corp had 16% of its portfolio in software names at the end of March, according to its quarterly report. Blue Owl Technology Finance Corp reported application and systems software borrowers made up 33% of its portfolio at the end of the first quarter.

Private credit lender Gladstone Capital Corp GLAD.O also reported first-quarter earnings on Wednesday. Its NAV per share remained relatively unchanged in the first quarter compared to six months ago, it said.