European private debt deals drop as banks claw back market share

Private debt deals in Europe declined sharply in the first quarter of this year, as competition with the broadly syndicated loan (BSL) market heats up.

Deloitte’s Private Debt Deal Tracker found that 112 private debt deals were completed in the first three months of 2024, a 41 per cent quarter-on-quarter decline.

“Although macro conditions have appeared to stabilise and Europe anticipated positive economic growth prospects, overall M&A activity remained subdued,” Deloitte said.

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Conversely, the BSL market recorded a total issuance of €29.3bn (£24.8bn) in Europe, the highest level since the second quarter of 2021. Deloitte said this was fuelled by a flurry of repricings hitting the market, with banks pitching aggressively to win back market share.

“Average new-issue TLB spreads decreased by 46 basis points from the previous quarter, marking the largest quarter-on-quarter decline since the fourth quarter of 2022,” Deloitte said. “As a result, a number of private debt facilities were refinanced with BSL issuances.”

Deloitte said the volume of private debt deals is expected to remain subdued throughout the first half, as an uptick in CLO issuances looks set to bolster BSL activity further.

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Within private debt, France and the UK remain the most active regions, Deloitte’s research found, although both saw a decline in the first quarter.

Just over a third (35 per cent) of activity across Europe took place in the UK, with 39 deals being completed.

Deals completed in France fell by 57 per cent quarter-on-quarter, with the country’s share of total deals falling to its lowest level since the fourth quarter of 2021.

Germany, Benelux and the Nordic region have the lowest share of deals by volume.

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