AFME is delighted to circulate its High Yield, Leveraged Loan and Private Credit report for the second quarter of 2026. 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:
European leveraged debt markets (leveraged loans, direct lending, and high yield bonds) totalled €167bn in proceeds in Q2 2026, an increase of 10.8% from €150.7bn in Q1 2026 and a decrease of 3% from €172.1bn in Q2 2025.
Direct Lending origination reached €20.5bn in Q2 2026, a decrease of 25.2% year-on-year and of 36.1% quarter-on-quarter.
LBOs (29%) and acquisitions (26%) represented the largest share of proceeds, while refinancing accounted for 24% of the total.
High Yield Bond issuance totalled €50.4bn in proceeds, an increase both from the previous quarter (+125%) and year-on-year (+6.7%).
Refinancing was the primary use of proceeds during Q2, accounting for 60% of total high yield issuance.
Leveraged loan origination reached at €96.1bn in Q2 2026, marking a 4.8% decline from Q4 2025 and a 6.7% increase from Q2 2025.
71% of leveraged loan issuance was used for refinancing, with an additional 5% for debt repayment.
Credit Quality:
The S&P trailing 12-month speculative grade bond default rate declined from 3.3% in Q1 2026 to 2.6% in Q2 2026. Moody's reported an increase in default rates to 4.5% in Q2 2026, from 3.8% in Q1 2026.
According to KBRA DLD, the European direct lending default rate by count is expected to decrease from 3% in June 2026 (TTM) to 2.25% by the end of 2026, while the default rate by volume is expected to decline from 1.25% in June (TTM) to 1% by year-end.
According to Fitch, the European leveraged loan trailing-12-month default rate by volume decreased from 3.4% in March 2026 to 2.6% in June 2026.
High Yield spreads decreased during the quarter from 3.4% to 2.7% by the end of June.
Yields on private credit loan origination have shown a declining trend, with euro-denominated yields decreasing from 9.3% in Q1 2025 to 8% in Q1 2026, before increasing to 8.4% by the end of June.
