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Recent tensions in the American Private Debt market should not obscure a more nuanced reality: Europe remains an attractive, less saturated and better-protected terrain. High spreads, a maturity wall and M&A momentum mean the signals are positive for the asset class, provided investors know where and how to deploy capital.
Recent tensions in certain American funds, with gates activated and redemption requests on the rise, have reignited the debate. Does Private Debt remain an attractive asset class? Our conviction at Opale Capital is clear: yes, provided investors know where and how to invest. Here is our reading of the market.
The American market is, by far, the most developed. It has also been the most aggressive. Under the pressure of massive fundraising, certain lenders progressively relaxed their standards: lighter covenants, financing structures based on ARR (annual recurring revenues) rather than EBITDA, and higher leverage in sensitive sectors such as technology.
This loosening has concentrated in the upper mid-market segment, where competition between platforms has at times taken precedence over credit discipline. This is where tensions are most visible today, and where defaults could increase if refinancing becomes more complex.
Europe presents a markedly different profile, which is precisely why Opale Capital has chosen to invest exclusively in senior Private Debt in its selection.
The market is structurally less saturated, and credit practices generally remain more conservative: more moderate leverage levels, better-preserved covenants, and financing anchored to proven operational indicators, foremost among which is EBITDA.
The premium on offer to investors remains significant: certain European mid-market segments display spreads more than 100 basis points above their American equivalents, reflecting lower competition and enabling greater selectivity in origination.
This differential is now measurably attracting international allocators: European Private Debt funds captured 46% of global fundraising in the first nine months of 2025, compared with just 23% in 2024, a near-doubling in one year that reflects far more than a simple diversification effect.
The European Private Debt managers with whom we engage regularly, running Evergreen funds both in Europe and the United States, have not observed strong redemption demand in their purely European funds. The geographical distinction is far from trivial.
The recent and sustained M&A momentum should stimulate financing demand, creating a more favourable environment for new credit origination and therefore better selection conditions for General Partners (GPs).
More than $3 trillion in loans are set to mature over the next five years. This refinancing wave represents a considerable structural opportunity for well-positioned Private Debt funds.
Market consensus anticipates two to three 25-basis-point rate rises from the ECB (European Central Bank) in 2026, against a backdrop of renewed inflationary concerns. Should these materialise, they would leave room for a macroeconomic environment favourable to Private Debt fund returns. Moreover, during periods of rising rates, banks typically reduce their lending volumes, which would further diminish competition for direct lending managers.
In a macroeconomic environment creating more pronounced divergence in corporate trajectories, not all General Partners (GPs) are equal. Differentiation will increasingly rest on the quality of financing: credit origination criteria, collateral monitoring, creditor influence, and the choice of financial sponsor.
At Opale Capital, our selection is based on strict criteria:
European senior Private Debt remains attractive, offering superior returns and historically lower default rates than listed syndicated loans. But the current environment calls for a more rigorous selection process than ever: the quality of the General Partner (GP), credit discipline and geographical positioning are what make all the difference today.
To understand the recent context of tensions, read our article: ➡️ What happened to private debt?
Sources: Discussions and reports from: Ares, Apollo, Blackstone, Bridgepoint, Goldman Sachs, KKR, Morgan Stanley, Neuberger Berman, Sixth Street and Tikehau Capital. Studies by Ares / Blackstone Credit / Golub Capital (LTV structures and senior secured). Preqin. Goldman Sachs Investment Research & Preqin, 2025.
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OPALE CAPITAL SAS, a French simplified joint-stock company (société par actions simplifiée), with a share capital of €4,659,164, registered office at 32, rue de Monceau 75008 Paris, registered with the Paris Trade and Companies Register under number 921 277 208, approved by the Autorité des Marchés Financiers and registered with the AMF as a portfolio management company under number GP-20240010.
