AFME Q4 2025 European High Yield, Leveraged Loan, and Private Credit Report

AFME is delighted to circulate its High Yield, Leveraged Loan, and Private Credit report for the fourth quarter of 2025. The report provides detailed data and analysis on the issuance and credit performance for the high yield, leveraged loan and private credit markets.

 

Among the main findings of this report:

 

1. European leveraged debt markets issuance (leveraged loans, direct lending, and high yield bonds) totalled €445.8bn in proceeds in 2025, an increase of 2% from €438.5bn in 2024.

 

1. According to OCTUS, Direct lending origination reached €103.2bn in 2025 (€82.1bn in 2024FY), of which €24.1bn was issued in Q4 2025. The contribution of private credit to total leveraged debt markets rose from 19% in 2024 to 23% in 2025.

 

1. High yield bond issuance reached €148.9bn in proceeds in 2025, a decrease from €168.3bn in 2024 FY.
1. Refinancing was the primary use of proceeds during Q4, accounting for 59.8% of total high yield issuance.
2. Three sectors accounted for 57.5% of the high yield market by outstanding volume: Financials, Consumer Discretionary, and Communications.

 

1. Leveraged loan origination totalled €193.7bn in 2025 (€188.1bn in 2024FY), with €37.5bn issued in Q4.

 

1. Credit Quality: European high-yield bond defaults increased in Q4 2025, with 12 defaults reported (up from 6 in Q3). Most of these defaults were the result of distressed exchanges.
2. According to S&P, the trailing 12-month speculative-grade bond default rate stood at 4.0% at the end of December 2025 (from 4.14% in January of 2025). Moody's reported an increase in default rates, from 2.73% in December 2024 to 3.9% in December 2025.
3. According to Fitch, the European leveraged loan trailing 12 months (TTM) default rate calculated by volume stood at 2.5% at the end of 2025.
4. According to KBRA DLD, default rates for European direct lending increased in 2025, both when estimated by count and by volume. In 2024, the default rate by count was 1%, while the TTM default rate as of December 2025 stood at 1.6%, while forecasts indicate a rise to 2.25% by the end of the year. In terms of volume, the default rate increased from 0.4% in 2024 to 0.9% (TTM), with forecasts expecting it to reach 1.25% at the end of 2025.

 

1. High Yield spreads remained broadly unchanged from the end of September, closing the year at 2.7%.
   1. Yields on private credit loan origination have shown a declining trend, with euro-denominated yields standing at 8.6% by the end of the year and 10.04% for GBP-denominated.