Direct lending deal quantity in Europe fell within the first quarter of 2024, as competitors with the broadly syndicated mortgage (BSL) market heats up.
Debtwire’s analysis discovered that €13.7bn (£11.7bn)-worth of direct lending offers have been executed within the continent within the first three months of the yr, throughout 208 transactions.
That is down from €15.2bn unfold throughout 164 offers within the first quarter of 2023.
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The BSL market has recovered this yr, offering cheaper entry to leveraged financing.
Institutional mortgage and high-yield bond issuances totalled €84bn within the first quarter, in line with Debtwire, greater than double the €31.9bn recorded a yr prior.
This has resulted in “a major menace to direct lenders”, Debtwire stated, who’ve responded by proactively repricing personal loans and trimming margins to stop offers being refinanced within the BSL market.
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A few of Europe’s largest direct lenders – together with Goldman Sachs, Blackstone Credit score, Apollo International Administration and CVC Credit score – have repriced personal credit score offers within the first quarter.
Tim Hynes, international head of credit score analysis at Debtwire, stated the report reveals how shortly issues can change when the BSL market returns.
“A year-on-year discount of round 10 per cent in deal quantity regardless of a 16 per cent uptick in deal depend is emblematic of an M&A market by which urge for food for jumbo-sized leveraged buyouts stays muted,” he added. “The autumn can be attributed largely to rising competitors from the BSL market, which bounced again to life within the first quarter of this yr, offering cheaper entry to leveraged financing.”
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Nonetheless, Hynes famous “promising indicators within the fundraising market”, as direct lenders collectively raised €15bn within the first quarter. This included Arcmont’s €10bn fundraise for its newest direct lending classic.
Main the pack
Park Sq. topped Debtwire’s first-quarter European direct lender rankings, with seven new offers giving the fund a market share of 6.5 per cent. This was adopted by Ares, Goldman Sachs Non-public Capital, Investec Non-public Debt, Muzinich and Permira Credit score, with six offers every and a market share of 5.6 per cent.
On the subject of ESG-linked offers, Pemberton topped the listing, with 4 transactions and a 12.5 per cent share of the ESG market. In joint-second place have been Ares and Apera, each of which recorded three offers, giving them a market share of 9.4 per cent every.