€6.6bn of private credit facilities were refinanced in H1

During the first half of the year, €6.6bn (£5.56bn) of private credit facilities were refinanced on the European broadly syndicated loan market.

According to a bi-annual survey on European leveraged finance carried out by PitchBook LCD, there are a range of reasons why companies might seek out more financing from the private credit markets in the second half of the year.

27 per cent of market participants said market volatility/execution certainty would be the driving factor behind refinancing; while 27 per cent cited the increasing market depth; and a further 27 per cent said that the availability of payment-in-kind debt made private credit more appealing.

Read more: European private debt deals drop as banks claw back market share

Another 18 per cent said flexibility of terms would be the main reason why they would choose to refinance using private credit.

Elsewhere in the survey, 18 per cent of market participants pointed to geopolitical volatility as the biggest risk to leveraged credit portfolio performance over the next six months. 15 per cent cited credit quality risks as the second-biggest threat.

Read more: Ares, Eurazeo and Goldman top European direct lender rankings

Meanwhile, one survey respondent said that “new funds, especially CLOs, are having to add some risky credits to their portfolios in order to get the economics to work, which could result in poor performance going forwards if those credit risks are not properly managed.”

The survey also found that 46 per cent of respondents believe that private credit allocations will increase in the second half of this year, underlining the ongoing popularity of the asset class.

Read more: Sponsors and borrowers “cautiously optimistic” this year