{"id":57510,"title":"European private credit lending hits record high amid private equity refinancing needs","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2026-08-25T07:14:35+00:00","modified":"2026-08-25T07:14:35+00:00","canonical_url":"https://stockmark.it/european-private-credit-booms-as-private-equity-firms-are-forced-to-re/","markdown_url":"https://stockmark.it/european-private-credit-booms-as-private-equity-firms-are-forced-to-re.md","json_url":"https://stockmark.it/european-private-credit-booms-as-private-equity-firms-are-forced-to-re.json","category":"Markets","categories":["Markets","Private equity"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/2026/08/european-private-credit-lending-hits-record-high-amid.png?fit=1536%2C1024&quality=80&ssl=1","format":"news","language":"en-GB","content":"Lending by European private credit firms reached a record high in the first half of the year, driven by a subdued dealmaking environment that compelled private equity sponsors to pause sale processes and renegotiate debt for their portfolio companies. According to new data from analytics platform Debtwire, the value of direct lending across the continent totalled €63.2bn, equivalent to £54.1bn, during the first six months. This figure represents a significant increase from the approximately €40bn recorded in the same period last year, with the surge primarily attributable to a spike in borrowing activity during the first quarter.\n\nThe initial surge in lending was largely fuelled by private equity firms seeking to refinance debt for their holdings due to a slowdown in exits. Patrick Costello, EMEA private credit analyst at Debtwire, noted that the lack of exit prospects for private equity-backed companies is a primary reason lenders and sponsors are pushing maturities out through refinancing. He added that further refinancing activity is expected in the second half of the year and into next year, provided that mergers and acquisitions activity does not recover. Refinancing activity was concentrated in the first quarter, during which private credit firms lent approximately €34.8bn, before experiencing a slump in the second quarter.\n\nThe broader trend of non-bank lending has expanded in recent years as traditional banks have retreated from issuing loans to higher-risk businesses, while borrowers increasingly prioritise the speed and flexibility offered by private credit providers. However, the overall value of direct lending in the second quarter fell by 25 per cent year on year to €28.4bn following a drop-off in M&A activity, a key driver of the market. Debtwire analysts indicated that this decline reflected a lull in lending to large firms, which opted to tap public debt markets to secure cheaper deals. Costello explained that many large-cap borrowers likely chose public markets over the private credit space, where pricing tends to be more expensive, although the pipeline for the second half remains promising with several large-cap borrowers preparing to approach debt markets.\n\nThis shift has forced private credit firms to rely more heavily on smaller mid-market deals. While competition with public debt markets is less acute in the middle market than in the large-cap space, direct lenders remain locked in intense competition to win deals, particularly for highly attractive credits. Deal flow across individual markets also declined as large-cap borrowing shrank in the second quarter. The Nordic states experienced the largest drop, with deals falling 23 per cent to 30. France recorded the second largest decline at 17 per cent, though deal completion remained high at 91, second only to the UK and Ireland, which recorded 186 deals. Among direct lenders, Ares completed 31 new deals, accounting for roughly 7.8 per cent of the market. Arcmont followed with 23 deals worth 5.7 per cent of market share, while Apollo ranked third with 20 deals."}