AFME is pleased to circulate its European High Yield and Leveraged Loan quarterly data report for the second quarter of 2025. The report provides detailed data and analysis on the issuance and credit performance for the high yield and leveraged loan markets.
Among the main findings of this report:
- European Leveraged Finance issuance (leveraged loans and high yield bonds) declined to €115.5bn in proceeds in Q2 2025, from €148.3bn in Q1 2025. This overall decline was driven by a sharp drop in leveraged loan activity.
- High Yield Bond issuance totalled €48.7bn in proceeds, showing a strong recovery in Q2 2025, up 68% quarter-on-quarter and 1.8% year-on-year.
- Refinancing was the primary use of proceeds during Q2, accounting for 71.5% of total high yield issuance.
- Three sectors accounted for 59% of the high yield market by outstanding volume: Financials, Consumer Discretionary, and Communications.
- Leveraged loan origination fell sharply to €66.7bn in Q2 2025, marking a 44% decline from Q1 2025 and a 13% decrease year-on-year.
- Institutional loan spreads (3-month rolling average) widened from about 341 basis points in Q1 to 391 bps in Q2, while pro-rata loan spreads increased from 200 bps to around 354 bps.
- The Healthcare sector led Q2 leveraged loan issuance with approximately €12bn in volume, followed by Computers & Electronics (€8bn) and Professional Services (€7bn).
- Credit Quality: European high-yield bond defaults increased in Q2 2025, with 20 defaults reported (up from 12 in Q1). Most of these defaults were the result of distressed exchanges or missed payments. Nonetheless, speculative-grade default rates remained relatively moderate, ending the quarter at 3.93% (S&P) and 2.60% (Moody’s).
- Market spreads experienced volatility during the quarter. High yield credit spreads widened amid tariff-related concerns early in Q2, peaking at about 4.19%, but later eased back to roughly 3.1% by the end of June 2025.
