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2025 Highlights
Despite what many would qualify as a slower year for debt issuance overall, PGIM’s Paris office successfully closed 15 deals. Following a brief slowdown after “liberation” day, momentum accelerated from September, with over half of the region’s deals closing in Q4. Investments spanned diverse sectors, structures, and geographies, with continued strong demand for financing in infrastructure and related services, aerospace and defence, and the energy transition.
Private Placements
Private placement activity picked up in the latter part of the year as issuers sought to capitalise on historically low spreads. That said, we did see many CFOs hesitating to lock in longer-term ten plus year maturities, as they also want to manage the potential for further interest rate compression.
Most issuance was a result of either refinancing of near-term maturities, or refinancing of acquisition bridge lines, mostly linked to U.S. targets and therefore USD-driven. Importantly, many of our existing borrowers were eager to establish new Shelf facilities or roll existing ones, usually a fairly straightforward amendment process, as they anticipate potential pick up in M&A in the near to medium term.
Direct Lending
Sponsor-backed deal flow continues to drive the Direct Lending market, as sponsors have pivoted away from bank financing and funds are willing to push leverage levels and provide flexibility in documentation, in particular for “buy and build” strategies. With overall M&A levels remaining muted, Direct Lending deal flow saw a rise in recaps and refinancings, especially on larger deals.
For PGIM, however, we have really seen the benefit of having a pan-European platform with local relationships, direct access to mid-market borrowers, and appetite for sponsorless transactions. This, combined with successful fundraising during the year, has meant that we have continued to see ample opportunities in a more challenging market.
Real Assets
Renewables, digital infrastructure, and transportation continue to drive issuance for our infrastructure platform. However, we have also seen several opportunities in both water utilities, as they have meaningful investment needs and the long-term financing matches the asset profile, and the oil & gas sector, as banks have been pulling back.
Outlook for 2026
We continue to take a cautiously optimistic view of the market. We believe M&A is likely to pick up, as many sponsors face mounting pressures to divest, and issuers appear increasingly willing to accept the uncertainty in the market as the new normal, making them willing to make longer term strategic decisions. Recent European economic growth indicators have been more positive than expected which will hopefully help build momentum.
Transaction Highlights
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