CVC: Strong private credit demand despite tighter spreads

Fundraising for private credit has remained robust as limited partners continue to favour the asset class, despite tightening spreads, CVC has said.

In its fourth-quarter outlook, the private markets manager struck a positive tone for the asset class heading into 2026, after completing 50 transactions across its private credit platform in 2025, including deals in France, Belgium and Spain.

The outlook noted that, despite recent spread tightening, fundraising has remained strong from investors due to its income profile and low mark-to-market volatility.

This year’s outlook is also expected to benefit from an increase in merger and acquisition activity as financing costs continue to fall and sponsors seek to realise distributed to paid-in capital, CVC said.

Alongside its forward-looking assessment, CVC said that 2025 saw strong private credit demand in Europe, with direct lending in the region recording an estimated annual record on both a deal-count and volume basis. Total issuance reached an estimated €41bn (£35.8bn) for the year, representing increases of eight per cent and 66 per cent compared with volumes in 2024 and 2023, respectively.

CVC added that, despite private credit coming under scrutiny last year, fundamentals have remained relatively resilient. “Corporates not only exited 2025 with fairly sound balance sheets but enter 2026 with the prospect of declining interest rates, which points to further falls in financing costs,” said CVC.

Alongside this, European borrowers have enjoyed greater cash flow stability and stronger interest coverage ratios than their US counterparts, which should continue to support more resilient outcomes for the region in 2026, the manager added.

In alternative credit, CVC highlighted that it issued eight CLOs in 2025 and completed 21 resets and four refinancings across its platform over the course of the year.