We surveyed 168 lenders across Europe to understand how recent macroeconomic, political, and competitive shifts are shaping borrower outcomes.
Respondents included both banks and debt funds, spanning a broad mix of countries, regions, and ticket sizes, providing a representative view of the European leveraged finance market.
In 2025, lenders navigated a complex backdrop marked by tariffs, geopolitical uncertainty, and the rapid acceleration of AI adoption, all of which influenced market sentiment and decision-making. At the same time, easing inflation and declining benchmark rates pointed to a more stable underlying economic environment.
Against this backdrop, the market saw intensifying competition, subdued M&A activity, and an ongoing preference for higher-quality credits. Together, these dynamics drove a notable shift toward more borrower-friendly terms in 2025, including increased leverage appetite, improved pricing and greater structural flexibility.
Key highlights
69%
of respondents saw margin reductions, with almost half (46%) of those reporting a reduction of 50bps or more
37%
of respondents reported that internal leverage appetite was higher than the prior year
41%
of debt funds reported an intention to increase hold capacity
45%
of debt funds indicated a typical headroom of 35% or more, which is a significant increase from previous years
“Over the last 12 months, we have successfully completed over 70 debt advisory transactions across Europe. As we move into 2026, momentum remains strong, with a robust pipeline supported by our private equity relationships, ongoing demand for funding, and improving credit appetite across the lender landscape.”
Simon Chambers, Partner and UK Head of Debt Advisory, Clearwater
Selected debt advisory transactions
Our transactions range across primary debt raises, acquisition finance, refinances, amendments and restructurings for a wide range of borrowers, providing accurate and up-to-the-minute market intelligence.
Leading multi-disciplinary building consultancy secures strategic financing to accelerate growth
Adviser to Erisbeg-backed ORS on its refinancing
Strategic acquisition expands Presidio’s global footprint to better serve multinational clients with end-to-end digital transformation solutions
Adviser to Ergo on its definitive agreement to be acquired by Presidio
Leading multi-disciplinary utility provider secures strategic investment from transatlantic investment management firm
Adviser to GMC on its investment from TowerBrook Capital Partners
Transatlantic investment manager secures financing for strategic investment in leading multi-disciplinary utility provider
Adviser to TowerBrook Capital Partners on raising finance to support its strategic investment in GMC
Our European debt advisory leads
Manuela Scheibe
Partner and Nordic Head of Debt Advisory +46 76 722 51 00 manuela.scheibe@clearwatercf.com ConnectFind your local debt advisory team
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