Private credit spreads have tightened this year, as the industry works to remain competitive with the broadly syndicated loan (BSL) market.
PitchBook LCD’s European Private Credit Monitor found that the median spread in 2025 up until April is 525 basis points (bps) for all deals, compared to 550 bps in 2024 and 613 bps in 2023.
“As a result of the excessive demand for credit compressing spreads in the broadly syndicated market, private credit had to shift its pricing, particularly in 2024, to remain competitive with BSL,” the report said.
Read more: Proskauer: Three risks to monitor in private credit
The private credit sector benefitted from the BSL market’s hiatus in 2022 and 2023, but its return has spurred increased competition for the most attractive deals.
However, US tariff policy announced on 2 April resulted in severe market dislocation and a pause in syndicated markets, which benefitted direct lenders, PitchBook LCD said.
Read more: Aberdeen: Dislocation in public markets provides opportunities for private credit
The report revealed that lending activity in Europe is up this year, with buyout volume specifically up 23 per cent.
“Direct lenders moved quickly to take advantage of the pause in syndicated markets, letting companies and sponsors know that they were open for business,” the report said.
“On a rolling three-month basis, deal flow and estimated volume are also up to the end of April, with April the most active month by estimated deal volume in the year so far.”
Read more: High-yield bond & leveraged loan maturity could create private credit opportunities
