European leveraged loan market wraps Q3 with record €157bn
The European leveraged loan market has closed the third quarter of 2024 with record year-to-date institutional activity of €157bn (£134bn), according to PitchBook LCD’s European Credit Markets Quarterly Wrap.
The total, which includes repricings and extensions, already exceeds 2021’s full year €143bn total, and represents the highest total on this measure since LCD began tracking repricings back in 2014.
Repricing volume also soared towards the end of the third quarter, taking repricing volume for the first three quarters of 2024 to €59.1bn — the highest such level since 2017.
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New loan issuance, excluding repricings and extensions, was €81bn through three quarters, making it the busiest period for loans since the first three quarters of 2021, when loan issuance hit €107.2bn.
PitchBook characterised the year as one dominated by refinancings. Refinancing volume in Europe for the first three quarters of this year was €39.2bn, beating 2017’s €33.7bn. Moreover, €42.3bn of loans were extended in 2024.
Meanwhile, M&A related financing has been gaining momentum over the three quarters. PitchBook noted that 40 per cent of new leveraged loan issuance was assigned to M&A in the third quarter. In the second quarter, 34 per cent of European issuance was driven by M&A activity, while in the first quarter M&A accounted for just 21 per cent.
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However, the relative slowdown in actual M&A transactions this year has caused congestion in the private credit market as investors struggle to exit.
“As M&A hasn’t quite come back, we are seeing significant add-on/refinancing activity in our portfolios,” said Stuart Mathieson, head of Europe and APAC private credit and capital solutions at Barings.
While another PitchBook source commented: “We have been saying it’s coming back for a while, but now we think 2025 is the most likely finishing line.”
PitchBook data shows that so far this year nearly 70 per cent of direct lending deals were acquisition-related, down from 76 per cent in 2023.
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