Key facts
- European private credit lending hit a record €63.2bn in the first half of 2026.
- The surge was driven by private equity firms refinancing portfolio companies' debt.
- Lending in the second quarter fell 25% year-on-year to €28.4bn due to a drop in M&A.
- Large-cap borrowers increasingly turned to public debt markets for cheaper financing.
- Ares, Arcmont, and Apollo were among the top direct lenders by deal volume.
European private credit lending reached a record high in the first half of the year, with direct lending across the continent totaling €63.2bn. This surge was largely attributed to private equity firms seeking to refinance debt for their portfolio companies amid a subdued dealmaking environment and a slowdown in exits. The first quarter saw a significant spike in borrowing, with €34.8bn lent, before a 25% year-on-year drop in the second quarter to €28.4bn, reflecting a lull in M&A activity.
Analysts suggest that larger companies increasingly opted for public debt markets to secure more favorable pricing, bypassing more expensive private credit funds. This trend has pushed private credit firms to focus more on mid-market deals, where competition with public markets is less intense, though direct lenders are still competing fiercely amongst themselves for attractive credits.
Deal flow varied across regions, with the Nordic states experiencing the largest decline in deals. The UK and Ireland led in deal completion, while firms like Ares, Arcmont, and Apollo were identified as key players in the direct lending space based on the number of deals completed.