Debt Market Monitor: 2020 Review & 2021 Outlook

European economic outlook:

  • 2020 has been an unprecedented year for the European debt market, with deal activity heavily impacted by the pandemic - down 33% on 2019, with 295 deals closed in 2020 compared to 441 in 2019*
  • Conditions improved in the second half of the year with deal activity up 66% on H1*. Underpinned by the unparalleled government support across Europe, growing confidence levels, increased M&A activity - accounting for 61% of total deal activity in H2*, and vaccine developments demonstrating the path to a post Covid-19 world
  • Looking ahead to 2021, we believe continued optimism on the vaccine rollout, visibility on the roadmap to ending lockdowns and extension of key government support policies will provide an improved backdrop for the debt markets
  • We expect the uptick in stressed refinancing activity to continue, with many businesses having to address upcoming debt maturities amid challenging LTM trading and overleveraged capital structures
  • We expect certain 2020 trends to continue into 2021, such as the high bar for credit approvals, focus on businesses that can demonstrate resilience, and direct lenders increasing their share of volumes further – in the UK for example, unitranche deals accounted for 78% of total deals in 2020 compared to 62% in 2019*

LBO Transactions per region covered

Percentage of deals accounted for by LBO transactions per region

Source: DC Advisory lender survey (January 2021)*

UK highlights

  • Activity levels in Q4 2020 built on the momentum seen during Q3, which we attribute to a rebound in M&A and refinancing activity, including stressed refinancing transactions
  • Lender appetite has been focused on businesses that have proven Covid resilient, and whose medium term post-Covid outlook remains positive. We are seeing these types of businesses secure attractive terms and aggressive leverage
  • For ‘story’ credits, we are seeing lenders assess Covid scenarios taking into account the pace of the vaccine rollout across geographies
  • For 2021, we expect direct lenders to remain the most active source of financing particularly for M&A, with banks focusing their efforts on supporting existing clients and typically showing reduced appetite towards super senior facilities

UK: by deal type 

Deal volumes in Q4 2020 were up dramatically from the previous two quarters and exceeded the levels seen in Q1 2020. Unitranche deals made up a significant proportion of the Q4 2020 deals with club deals still far below pre-Covid levels

Source: DC Advisory lender survey (January 2021)*

France highlights

  • The lending market was quite active in Q4 2020, with many transactions that kicked off after the summer completing before the Christmas break
  • Given the second lockdown in France in November and the potential of an incoming third, the French lending market is operating at two different speeds;
    • Lender appetite on Covid-proof assets, notably in software and healthcare is very high
    • Lenders are more careful on Covid adjustments for non Covid-proof assets. For these businesses, we would recommend to refine views on the potential impact of a third lockdown and the post crisis deleveraging profile
  • Private debt funds’ market share is increasing in the mid-market amid banks’ renewed cautiousness on underwriting. Some private debt funds still need to deploy and can propose very competitive terms

France: by deal type

Following a significant decline in activity through Q1 to Q3 2020, Q4 2020 saw a marked uptick in LBOs, with overall activity recovering to 94% of Q4 2019 levels

Source: DC Advisory lender survey (January 2021) Note: Refi denotes a refinancing, recapitalisation or transformative add-on*

DACH highlights

  • We saw the DACH leveraged loan market further strengthen in Q4 2020, following a rebound in lending activity in Q3, with activity approaching pre-crisis levels 
  • Resumption of deals put on pause in Q2, accumulated dry powder, vaccine news, government support and investors’ ongoing interest for companies which have proven Covid resilience (e.g. IT, healthcare, telecoms), has driven this uptick
  • Since the start of the Covid-19 liquidity programme in March 2020, KfW (Kreditanstalt für Wiederaufbau) has received c.115,000 loan applications totalling more than EUR 59bn1. This programme is due to expire at the end of June 20212
  • In our view, Q1 2021 will likely be another intense quarter of LBO activity as we have already seen the market pick up, with several M&A processes kicking off in January
  • Resilient sectors will continue to attract appetite from investors and lenders. Recent related transactions have shown strong competition among funds and banks with terms and pricing approaching pre-crisis levels - we expect this trend to continue for these sectors
  • We expect to see further financing opportunities in the digital infrastructure sector as investors are increasingly turning their attention towards the rollout of FTTH networks driven by the ongoing digital transformation

DACH: per nature of deal

Leveraged loan activity has picked up notably in H2 2020, with this expected to continue in Q1 2021 supported by stronger financial markets

Source: DC Advisory lender survey (January 2021)*


Benelux: by deal type

Deal activity in Q4 2020 surged c.2.7x vs.Q4 2019 mainly driven by the substantial rise in the number of LBO transactions in the period (highest level in the last three years)

Source: DC Advisory lender survey (January 2021) Note: Refi denotes a refinancing, recapitalisation or transformative add-on*

Spain highlights

  • Spanish buyout activity steadily picked up over 2020, with Covid-proof sectors such as infrastructure, telecoms and healthcare dominating the scene. The KKR acquisition of MasMovil3 (EUR 3.3bn loan issuances) and Apax’s EUR 1bn+ sale of Idealista4 are examples of the pent-up demand from buyers to put capital to work
  • Government support schemes are still playing a relevant role, with new programmes like the country´s rescue fund (SEPI) and the extensions of the previous schemes giving oxygen to capital structures
  • For 2021, we believe resilient sectors will continue to attract appetite while the sectors hardest hit by the pandemic will see continued low levels of activity. We expect critical sectors such as tourism, leisure and retail to experience difficulty, and likely have access to private credit removed for the time being
  • Consolidation of the banking sector (in 2020 Caixabank and Bankia, two of the top five Spanish banks, announced a merger5) will bring new opportunities to the table for institutional lenders in 2021
  • With progressively overleveraged capital structures and still depressed current-trading, we expect an increase in refinancings as maturities draw near and debt servicing increases

Spain: by deal type 

Leveraged loan activity has increased significantly in Q4 2020, with a record high level of LBOs and refinancings among PE-backed companies

Source: DC Advisory lender survey (January 2021)*

Italy highlights

  • As of January 2021, state-guaranteed loans have reached a total volume of EUR 20.9bn6
  • Lending activity did not slow down in the last quarter of 2020, with new initiatives launching, including ‘Project Zefiro’, led by a consortium of four Italian pension funds (Fondo GommaPlastica, Fopen, Pegasoand Previmoda), which will focus on the private debt segment in Italy and Europe with a total commitment up to EUR 195m7,8,9
  • The credit market has somewhat recalibrated since the first lockdown and lenders are beginning to shift focus and resources back towards new transactions
  • We expect banks to continue to focus on granting clients access to government loan schemes, which may leave reduced capacity for M&A opportunities
  • On the other hand, the different performance targets of debt funds (deployment targets, typically smaller portfolios and a finite investment period) means they are increasingly open for business
  • Companies operating in the industrials, technology & software, manufacturing and food & beverage sectors have been the top targets for private lenders. Despite the significant impact on the food & beverage market there have been nine issues of minibonds and one direct lending deal in the sector10



(*) All data in the tables of this presentation has been collected via DC Advisory’s independent survey of 93 European banks and direct lenders, which was completed in January 2021 (conducted across UK, France, Germany, Austria, Switzerland, Spain, Belgium, Netherlands and Luxembourg)

1. Kreditanstalt für Wiederaufbau, ‘Information for media representatives and multipliers: KfW Corona Help’, accessed via

2. Kreditanstalt für Wiederaufbau, ‘KfW special program is being extended and expanded – KfW espress loan and now also for small businesses’, accessed via (Nov 6 2020)

3. Financial Times, ‘Spain’s MasMovil to be acquired in 5bn private equity buyout’, accessed via

4. Financial Times, ‘EQT agrees €1.3bn deal for Spanish property site Idealista’, accessed via

5. Financial Times ‘CaixaBank and Bankia strike deal to create Spain’s biggest lender’, accessed via

6.  Sace Simest, ‘Italy guarantee: the volumes of the restart, accessed via 

7. Fondo Gomma Plastica, Zefiro Project: four Negotiable Pension Funds invest together in Private Debt’, accessed via

8. Pegaso, ‘Zefiro project: investing together in the Private Debt’, accessed via (Jan 7 2021)

9. Pensions & Investments, ‘Italian pension funds team up for private debt allocation’, accessed via (Dec 23 2020)

10. Be Beez, ‘Investors still like Italian food & beverage while Covid-19 emergency slowed down private capital deals in the sector to 35 YTD from 55 in 10 months 2019’, accessed via


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