Europe set to outpace US as private credit boom gathers pace
European private credit is forecast to expand faster than in the US over the coming years, with global assets under management expected to approach $3tn (£2.3tn) by 2028.
A new report by Moody’s Ratings has found that Europe’s growth rate has the potential to outpace that of the US, with European private credit assets projected to reach between $800bn and $900bn by 2028.
Fundraising activity in the sector has “rebounded strongly” in 2025, with Europe capturing nearly half of all global funds raised in the first half of the year and accounting for five of the 10 largest fundraises, the ratings agency said.
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“Capital is shifting toward Europe as the region’s appeal is supported by lower interest rates, a more predictable policy environment, higher yields, more attractive valuations, and opportunities in infrastructure, renewables, artificial intelligence, and data centres,” Moody’s said.
While some fiscal flexibility remains, significant funding gaps persist, creating opportunities for private credit to provide long-term, tailored financing, the report noted. With European investors focusing on defence, digital infrastructure and the energy transition, global funds and banks are increasingly deploying capital into these sectors.
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In terms of specific lending activity, Moody’s highlighted strong expected growth in asset-backed finance, underpinned by the use of forward-flow agreements. The agency also noted that large US alternative asset managers are forming long-term partnerships with, or acquiring, UK life insurers.
Moody’s pointed to a growing trend among European banks shifting from traditional lending to partnerships with private credit managers, a move driven by regulatory pressures and the demand for more flexible financing solutions.
However, the report cautioned that as the European private credit market evolves, it will face many of the same challenges experienced across the Atlantic, including rising and hidden leverage, opacity, and concentration risk stemming from the dominance of a few large alternative asset managers.
Moody’s added that policy reforms are aimed at improving market depth and investor access in Europe, though fragmentation and regulatory hurdles continue to pose challenges to full implementation.
