European direct lending activity slowed in the second quarter of 2026 following a dip in big-ticket transactions, yet the region still set a half-year record for volumes, according to new research.

Direct lending volumes in Europe amounted to €28.4bn (£24.3bn) across 296 deals in the second quarter of 2026, down 25 per cent from the €38bn spread across 367 deals in the same period in 2025, according to research by Debtwire.

Volumes also fell from €34.8bn in the first quarter of 2026, despite deal count remaining relatively consistent at 303 in the first quarter to 296 in the second.

The report suggested that the fall in direct lending volumes in the second quarter was due to a slowdown in the large-cap space, following an “especially vibrant” first quarter for big-ticket transactions, rather than a significant decline in deal activity.

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Despite the slowdown in the second quarter, European direct lending volumes reached a record €63.16bn in the first half of 2026, the report said.

“At €63.16bn in first half of 2026, direct lending volumes are higher than any other half-year on record, putting the region on course for another record-breaking year provided this momentum can be maintained throughout second half of 2026,” Debtwire’s report said.

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US-based alternatives manager Ares claimed the top spot in the first half of 2026 for European direct lending, reporting 31 new deals that accounted for roughly 7.8 per cent of the market, according to Debtwire.

European private credit manager Arcmont placed second with 23 deals and a 5.8 per cent market share, while US manager Apollo followed in third place with 20 deals and a 5 per cent market share.

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