We believe that in 2025 the European leveraged loan market will broaden its appeal to investors as a significant asset class to consider. While it has been well established in the US, it has grown significantly in recent years in Europe, with its market size currently close to that of the European high yield bond market. We expect this growth trend to continue, driven by robust demand from private equity firms, as they continue to view this type of credit as a flexible source of capital to support leveraged buyouts and M&A activity. We believe that European leveraged loans deserve to attract a higher degree of focus from institutional investors, given it is an asset class that stands out as an attractive source of returns and portfolio diversification. 

In an uncertain environment characterised by elevated geopolitical risks, tariffs, large fiscal deficits and continued inflation uncertainty, we believe leveraged loans provide investors with an alternative source of diversification that has historically delivered stable performance across different phases of the cycle. Loans have historically shown less volatility compared to other fixed income assets, thanks to their low sensitivity to interest rates (given their floating rate structure) and a more stable investor base. Compared to high yield bonds, loans have a similar trading liquidity, but require a longer settlement period and have a slightly lower rating profile.

You can now read the full whitepaper at the link below