European Debt Market Monitor:
September 2021 

European economic outlook

  • Activity in the second quarter of 2021 has remained strong following a buoyant first quarter, with 174 deals completed during Q2 and 158 in Q1, resulting in one of the busiest first halves in recent history[1]
  • The UK remained the most active region, with 61 deals closing during the quarter[2]
  • Trends witnessed in the first quarter have continued to accelerate in the second quarter, increasing deal activity
  • These key trends include:
    • An increased number of LBO deals coming to market - underpinned by a strong M&A pipeline and the re-emergence of side-lined transactions - with the benefit of post-Covid trading and improving LTM EBITDA
    • A greater competition for assets across both equity and credit investors, resulting in higher EV and leverage multiples and borrower-friendly terms
    • Increased traction for the sectors which were most heavily impacted during the pandemic - though terms secured by these borrowers remain wider than the levels seen in 2019
    • Greater focus on ESG for borrowers, as it is equally a key performance metric for credit fund managers, and where appropriate ESG ratchets are implemented
  • Looking ahead, we expect deal activity to remain strong into the year-end across the full spectrum of transactions, but particularly LBOs as the post-summer M&A pipeline continues to build

LBO transactions per region covered 

Percentage of deals accounted for by LBO transactions per region*


UK highlights 

  • The UK mid-market had another strong quarter, with 61 deals closing during Q2 2021. Unitranche deals led the way, accounting for 72% of the total deals[3]
  • We saw high levels of activity and competition during the previous quarter putting a strain on lender bandwidth, with some lenders becoming selective on progressing deals to manage resourcing constraints
  • We believe this trend is set to continue, with Q3 2021 expected to be another busy quarter as the pipeline for post-summer deals builds
  • We expect that LBOs and refinancing will account for the majority of activity for the rest of the financial year, although stressed activity is likely to remain a theme, particularly as government support initiatives taper away
  • We can also expect the tempering of the economic outlook and persistent supply chain issues as another challenge that UK companies will navigate over the coming months

UK: by deal type

Deal volumes in Q2 2021 remained high as lenders continued to deploy capital following a depressed Q2 and Q3 2020. Unitranche transactions continue to represent the majority of leveraged loan transactions*


France highlights 

  • France experienced a strong acceleration of the trends observed over Q1 2021. These trends included an increase in deal flow, and competition on high-quality assets for both equity and credit investors. In the post-Covid-19 market, there are data points that allow investors to consider new opportunities and how to take advantage of them
  • Despite market uncertainty, France closed a high volume of deals that were completed in good conditions, at pricing and leverages largely on or better than pre-covid period
  • Noting that banks are still important underwriters, we also see that private debt lenders are gaining market shares and have become the first option when funding new deals, especially primary transactions
  • As lockdown begins to lift globally, our teams are working hard to source the best asset opportunities at better conditions than pre-Covid-19 levels

France: by deal type

The high level of leveraged loan activity seen in Q1 2021 continued into Q2, supported by a rebound in refinancing transactions following a quiet 2020*

Note: (*) Refi denotes a refinancing, recapitalisation or transformative add-on


DACH highlights

  • Since the start of the Covid-19 liquidity programme in March 2020, Kreditanstalt für Wiederaufbau (KFW) has received 145,901 loan applications totalling more than EUR 64.5bn[4]
  • We have seen our advisory pipeline improve considerably going into Q2 2021, which should lead to an active H2 2021 across multiple sectors
  • We believe that deal volume will be high throughout Q3 2021, continuing the positive trend in M&A, refinancing and recapitalisation. This is being driven by favourable pricing conditions and private equity sponsors taking advantage of high return rates

DACH: by deal type

Strong leveraged lending markets, an ongoing recovery of the European economy fuelled by inter alia a high vaccination rate and large levels of dry powder had a positive impact on deal activity in the DACH area in Q2-21*

Source: DC Advisory lender survey (April 2021)

Source : Kreditanstalt für Wiederaufbau (KFW) (2020)

Benelux: by deal type

Deal volumes climbed in Q2 2021, supported by a very high level of refinancing activity*

note: (*) Refi denotes a refinancing, recapitalisation or transformative add-on


Spain highlights

  • M&A activity in Q2 2021 remained strong, despite the uncertainty generated by the Delta Covid-19 variant, which affected the initial recovery trend seen in the hotel, travel and leisure sectors
  • The success of the Covid-19 vaccination programme has strengthened the economic outlook, driving a sense of optimism and increased confidence, with a high number of deals going to market
  • Private debt fund market shares are increasing in the mid-market as banks still remain cautious on underwriting. We believe that private debt funds have a significant level of dry powder, helping to drive competitive terms for the rest of the financial year
  • Refinancing activity remains low, although we expect activity to pick up following the implementation of the 'Good Practice Code’, which regulates the framework for maturity extensions for loans with public guarantees[5]. It is thought that the deadline for requesting an extension is 1 December 2021[6]

Spain: by deal type

Activity levels in Q2 2021 remained in line with previous years, with 11 completed transactions*


Italy highlights

  • Globally, market conditions have improved, and market volatility decreased in the last quarter - predominantly due to the global vaccination campaign. The re-opening of most economic activity, easing of government restrictions, and their implications (including national banks), have had a positive impact on market activity
  • Financing requests from Italian companies that have been monitored since the beginning of Covid-19 stopped during Q2 2021, reflecting a smaller number of investments versus the previous quarter. By contrast, household demand for mortgage loans have increased, a trend that is expected to continue in the coming months
  • During Q2 2021 Italian private equity and venture capital funds experienced an increase in investment activity (+19% increase in the volume of deals compare to the previous year). We anticipate this continuing as the market re-opens, with economic activity already leading to greater confidence in market conditions[7]
  • The capital structures of recent private equity deals have remained similar compared to the last quarter, with financial leverage between two and four times the EBITDA multiples [8]
  • The decrease in Italian business insolvencies recorded during Q2 2021(-29%YoY) should be considered as an anomaly due to the extraordinary liquidity and fiscal support measures globally adopted by central banks and national governments[9]

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[1] April 2021 DC Advisory Lender Survey - 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 April 2021 (conducted across UK, France, Germany, Austria, Switzerland, Spain, Belgium, Netherlands and Luxembourg) (Referred to herein as the "The April 2021 DC Advisory Lender Survey"); All data in the tables in this piece have been collected via the April 2021 DC Advisory Lender Survey

[2] April 2021 DC Advisory Lender Survey 

[3] April 2021 DC Advisory Lender Survey  

[4] Kreditanstalt für Wiederaufbau (KFW) (2020). Informationen für Medienvertreter und Multiplikatoren: KfW-Corona-Hilfe. [online] Available at: [Accessed 20 Sep.2021]

[5] Good Practice Code (n.d.). Medidas Codigo Buenas Practicas. [online] Available at: [Accessed 20 Sep. 2021].

[6] Agencia Estatal Boletin Oficial del Estardo (n.d.). - BOE-A-2021-7908 Resolución de 12 de mayo de 2021, de la Secretaría de Estado de Economía y Apoyo a la Empresa, por la que se publica el Acuerdo del Consejo de Ministros de 11 de mayo de 2021, por el que se aprueba el Código de Buenas Prácticas para el marco de renegociación para clientes con financiación avalada previsto en el Real Decreto-ley 5/2021, de 12 de marzo, de medidas extraordinarias de apoyo a la solvencia empresarial en respuesta a la pandemia de la COVID-19. [online] Available at:  [Accessed 20 Sep. 2021].

[7] PWC (n.d.). Global and Italian M&A Trends. [online] Available at: [Accessed 20 Sep. 2021].

[8] Deloitte (2021). Italy Private Equity Confidence Survey. [online] Available at: [Accessed 20 Sep. 2021].

[9] Atradius (2021). Country Report Italy - June 2021. [online] Available at: [Accessed 20 Sep. 2021].

*All data in the tables in this piece have been collected via the April 2021 DC Advisory Lender Survey.