Blog Post
SaaSpocalypse, Iran war driving direct lending pricing “free-for-all”
Oscar Laurikka, Head of Private Credit & Deal Origination - Europe
In the wake of the SaaSpocalypse and war in the Middle East, European direct lending has been in price discovery mode. The syndication of Electronic Arts buyout debt dominated conversation across private credit last week, as funds searched for a reliable pricing anchor.
The interim has been something of a free-for-all, with funds taking markedly different approaches to this latest window of uncertainty.
At a conference in London last week, a direct lender shared a telling case study. In February 2026, he had pitched cov-lite unitranche pricing for a heavily levered deal at 475 bps over with an OID of 99. One month later, pitching the same deal, he was 75 bps wider on margin, a point worse on OID, half a turn lower on leverage — and had added a maintenance covenant.
As he spoke, a rival muttered that “it can’t have been a very competitive deal,” since it bore little resemblance to the tighter spreads available on the strongest assets.
Even for those assets, though, caution has crept in. The repricing is probably closer to 25 bps than 75 bps, but terms like those seen on late 2025’s The Key and JTC Group are unlikely to resurface in Europe any time soon.
We also heard of one case where a direct lender went back to a sponsor post-closing to request an additional 25 bps in light of elevated market risk. Worth an ask, apparently.
With the first tranches of EA now priced, funds have at least one concrete data point to work from. How the rest of the deal fares following the latest Middle East escalations is another matter entirely.
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