Strategic View: DC Advisory’s Q2 2025 Debt Market Monitor reveals a resilient European mid-market. After a brief pause, June 2025 became the busiest month of the year for new loan volumes. The report highlights a key trend: club deals and direct lenders are stepping in with deep liquidity, filling the gap left by risk-averse banks.
Full story: The European debt market took a deep breath in April. Now, it is exhaling with force. The DC Advisory Q2 2025 Market Monitor, a must-read for debt financiers, paints a picture of a market rebounding with surprising vigor. After a U.S. tariff-induced slowdown, lenders and borrowers re-engaged by May. Then, June hit—becoming the busiest month for new loan volumes in 2025.
What is fueling this rebound? Deep lender liquidity. The report is clear: both banks and private credit funds have significant dry powder. However, the structure of deals has changed. The days of the widely-syndicated, high-leverage “cov-lite”* deal are not fully back. Instead, we are seeing a marked rise in sponsor-led club deals.
This is especially true in the UK mid-market. Deal count held resilient, ticking up to 63 deals in Q2 from 57 in Q1. This stability is noteworthy. It shows that while mega-deals remain challenging, the core of the market is being financed by relationship-driven clubs. Sponsors are calling on their trusted private credit partners and banks to form smaller, more agile financing groups.
The outlook for H2 2025 is constructive. Declining interest rates and stabilizing inflation are providing a stable floor. While geopolitical risks remain, the technical conditions are strong. The key takeaway from DC Advisory’s report is that the European credit market has found its new equilibrium. It’s a market defined by selectivity, but for the right assets and the right sponsors, the “club” is open for business.
*Cov-lite: “Covenant-lite” loans, which have fewer restrictions on the borrower.
Summary: The European debt market is back. DC Advisory’s Q2 report confirms a rebound, with June 2025 being a high-water mark for new loans. It matters because the “club deal” and private credit funds have proven to be the resilient, liquid backbone of the market, ensuring the M&A pipeline remains funded.
Source: DC Advisory
