Private credit competition is set to intensify in Europe

• Study finds private credit executives expect increased competition across Europe and in their own region

• Covenant headroom, duration and credit margins are key to being competitive

New research with private credit executives shows they expect competition in the sector to increase across Europe and in their own region, with covenant headroom rated as the most important competitive factor.

The study from Nordic Trustee, part of global capital markets services provider Ocorian, with private credit executives across the UK & Ireland, Germany, Switzerland, Benelux, the Nordics and Eastern Europe found 28% say the European direct lending market is currently highly competitive.

More than two-thirds (65%) of respondents believe the market is only moderately competitive, while 7% say competition in the sector is limited. The study involved professionals working across private credit and debt fund management, private equity and large corporates that use private credit as a source of funding, and debt advisory firms.

However, the research found that they expect the level of competition to increase over the next three to five years both at a European level and in their own region.

More than four out of five (81%) believe competition at the European level will increase, with one in seven (14%) predicting it will increase significantly. In their own region, 85% say competition will increase, with 41% predicting significant increases.

Substantial covenant headroom was identified as the most important competitive factor in the study, which asked executives to rate their top three most important factors ahead of attractive durations and the lowest possible credit margin.

The highest possible leverage was rated ahead of tailor-made credit structures in fourth and fifth place, with simple security packages ranked ahead of no amortisation and/or PIK interest and no or limited dividend restrictions, which was rated last.

Christoffer Anderson, Head of Private Credit at Nordic Trustee, said: “Private credit executives in Europe believe competition across the market will intensify over the next three to five years, with competition in their region likely to increase more than competition at the European level.

“Covenant headroom, attractive durations and lowest possible credit margins are seen as the most important competitive factors for direct lenders in the European market.”

Eamon Burns, Global Head of Fund Accounting at Ocorian, said: “The disintermediation of traditional lending continues to open up significant opportunities for private credit managers — but many don’t yet have the infrastructure to capitalise on it efficiently.  

“By combining Nordic Trustee’s loan agency capabilities with our loan administration fund platform, we’re uniquely positioned to enable managers to scale their business in today’s competitive environment.”

With over 30 years’ expertise in the bond and loan markets and a track record of facilitating 14,000 transactions over the years, Nordic Trustee brings an unparalleled depth of knowledge to support bond and loan transactions in the UK and Europe.

It differentiates itself through its proprietary technology, extensive restructuring expertise which includes more than 450 restructurings and 2,000 noteholder meetings, and a problem-solving approach that streamlines complex transactions for issuers and investors alike. Nordic Trustee is committed to delivering best-in-class trustee and loan agency services tailored to the needs of issuers, investors, and intermediaries.

* In March 2025, Ocorian commissioned an independent research company, PureProfile, to interview 210 private credit professionals working across private credit and debt fund management, investing in private debt, private equity using private credit, borrowers using private credit as a source of funding and debt advisory. Respondents were based in the UK and Ireland, Germany, Switzerland, Benelux, the Nordics and Eastern Europe