Octus on Credit: Banks celebrate record-breaking year; Direct lenders regroup with hopes for 2025 M&A recovery

Maryna Irkliyenko, Managing Editor, Debt Origination and Private Credit

As the year comes to a close, it’s time to take stock. It is fair to say that 2024 was the year of banks’ comeback, which meant the end of the ‘golden age’ of private credit when the BSL market was shut. Refinancings dominated deal activity with banks playing catch up, resulting in a record breaking issuance of €345.5 billion. Some 70% of loan issuance were refinancings, driven to a large extent by banks taking out private credit deals from 2022-2023 market dislocation, pointing to still low M&A volumes. 

Yet the year has also demonstrated that the market has recovered enough for mega deals to get done and financed, owing to increased liquidity. Sanofi’s consumer healthcare business Opella €16 billion sale to CD&R was a litmus test proving exactly that. This was also the deal where direct lenders regrouped and came into junior debt by providing €1.15 billion holdco PIK.

Looking forward, the million-dollar question is whether the long-awaited M&A pick up will actually take place. On the surface, there are all the necessary ingredients for activity to pick up: the bottleneck of exits accumulated in recent years combined with cheap financing available and a possibly more flexible regulatory environment in the US following the Trump administration inauguration in January. But with macro and geopolitical events hard to predict, an element of uncertainty remains.

In the more immediate future, the ongoing trends are set to carry on into 2025 with several high profile private credit deals eyed by the banks, including Europe’s largest ever unitranche – the €4.5 billion from Adevinta.