The European broadly syndicated loan (BSL) and private credit markets recorded record levels of activity in 2025, though the market became more divided following the bankruptcy of US auto-parts supplier First Brands.
According to the quarter four 2025 European debt market monitor by investment bank DC Advisory, total institutional loan volumes in the BSL market reached €250bn (£217bn), up from €207bn in 2024, the previous high.
The report, which surveyed 99 banks and lenders, said the activity was overwhelmingly driven by refinancings, repricings and extensions, which accounted for 60.6 per cent of overall volumes in 2025.
The report also found that the European private credit market had a record year, with total estimated volumes reaching €41.4bn.
According to the report, a trend that emerged in the European BSL market during the second half of 2025 was a market split, with lender appetite skewing further towards higher-quality credits.
The report said the split was likely prompted by the bankruptcy filing of First Brands Group in September 2025, which triggered a reassessment of downside risk.
“There has been reduced tolerance for opportunistic repricings and a modest widening of spreads in November, before renewed activity in the first half of December,” the report said.
Overall, the collapse of the US auto-parts supplier triggered widespread scrutiny of the private debt sector, with some stating that it showed signs of a systemic problem in private credit markets.
Read more: Fragmented securitisation rules are holding back Europe’s private credit market
However, competition between private credit lenders and the BSL market intensified during 2025, compressing margins which at points during the year reached 450bps for strong credits, the report said.
The report added that the recent escalation of conflict across the Middle East has introduced a fresh layer of geopolitical risk to global markets, but it remains too early to assess the duration of the conflict or its full implications for European debt markets.
Despite this, the report stated that the European credit markets entered 2026 with “ample” liquidity. The BSL market also had a strong start to the year, with higher volumes this January than a year earlier and further tightening of yields.
Meanwhile, in private credit, strong dry powder levels continue to support deal making, even though merger and acquisition volumes remain subdued, the report said.
