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Event Debtwire Private Credit Forum Europe
European outlook is rosy, say direct lenders
by Patrick Costello, Debtwire
Attendees at Debtwire’s Private Credit Forum Europe 2026 argued that, despite pockets of distress, demand for private capital is high and the sector’s record shows it is resilient
Dealmakers in Europe remain convinced of the potential of private credit even as it confronts challenges on multiple fronts, said panellists at Debtwire’s Private Credit Forum Europe 2026 on 17 June.
Key concerns facing the industry, such as fund exposure to software credits vulnerable to AI, are unlikely to vanish from dealmakers’ minds, but panellists at the Peninsula Hotel in London rebuffed allegations that private credit is a source of systemic risk that could trigger a 2008-style crash.
Instead, the emergence of the asset class in response to post-2008 credit market reforms should be seen as a source of resilience, one panellist noted. “This is an environment where a greater source of lending or lenders is a good thing... [that leads to] better management of liquidity dynamics,” they said. Dispersion in performance resulting from a proliferation of newer entrants should likewise not be confused with systemic risk.
Valuations have not plummeted
The evolving impact of AI on private credit-backed businesses was a recurring theme throughout the day, and vigilance towards the effects of AI on credits remains a key concern. However, panellists argued that, for many lenders, software portfolios have not taken a hit in performance following this year’s sell-off and many credits are poised for further growth over the next decade.
Speakers also noted that private credit is branching out into new pockets of the market beyond its traditional focus on lending to businesses. Data-centre financing has emerged as one appealing avenue for private capital deployment in 2026, given the pivotal role data centres play in building up AI infrastructure. Europe lags behind the US in its number of data centres, and the need for private capital spend is forecast to run into the tens of billions of euros over the coming years as the continent races to catch up.
The need for liquidity is fantastic for us
Martins Marnauza
Partner
Coller Capital
Private credit secondaries — in which portfolios of assets change hands between fund managers — are also beginning to gather steam in Europe. Often seen as a solution to funds grappling with the ever extending duration of portfolios, secondaries trades can address liquidity needs for fund managers while enabling new entrants to benefit from portfolio diversification while pushing for better terms.
“The resulting need for liquidity is fantastic news for us because deal volume is up, pricing is down, and we’re very excited about the next 12 to 18 months,” said Martins Marnauza, partner at Coller Capital. He added that the asset class is holding up well despite some pockets of distress.
Importance of scale and track record
The atmosphere for fundraising remains challenging, with the industry showing signs of bifurcation as asset allocators increasingly zero-in on funds with scale and a proven track record. Funds in both the large cap and mid-market spaces expect this turn towards manager differentiation to be an important theme in the years ahead.
“We’re consistently seeing that access is a differentiator that LPs are asking us about,” said Joseph Plank, managing director at Barings, making reference to the European middle market. A strong origination pipeline and demonstrated access to off-market situations, for example, are among the qualities that LPs are increasingly looking for in their selection of fund managers.
Despite these issues, panellists contended the industry is poised to weather these challenges intact and could come out in better shape than before.
“During each crisis, you hear that private credit is dead, but I have the impression that private credit comes back stronger after each crisis,” said François Lacoste, managing director at Eurazeo. “We have proven that we could generate long-term returns, with a limited level of default... over the long term.”