The corporate loan markets in both the United States and Europe have witnessed a significant resurgence following a period of reduced activity triggered by the tariff announcements from the Trump administration. This recent uptick is fueled by improved pricing and a growing appetite among investors, although concerns about credit quality continue to linger in the background.
Speculative-grade corporate loan issuance experienced a sharp decline in April but has since shown signs of recovery. This development offers corporate borrowers a valuable opportunity to refinance or reprice their existing debts. However, lenders remain cautious, and the possibility of acquiring new debt for acquisitions or other capital-intensive projects is now more viable.
Record Loan Issuance and Subsequent Decline
In the US, January and February recorded unprecedented levels of loan issuance, reaching $69.9 billion and $57.7 billion, respectively, according to PitchBook LCD. However, the Trump administration’s tariff announcements resulted in a significant drop in volume, plummeting to $35 billion and then taking a steeper plunge to $19.7 billion in April.
A similar trend was observed in the UK and other parts of Europe. Speculative debt issuance in these regions, typically overshadowed by the US market, also experienced a sharp decline. In April, UK issuance fell dramatically to $300 million from $2.5 billion, and among other European borrowers, it decreased to $6.5 billion from $16.1 billion.
Recovery and Renewed Demand
As May unfolded and into the first half of June, the loan market in these regions began to recover. The increasing demand from lenders has opened a window for corporate borrowers to issue debt at more favorable rates.
Marina Lukatsky, global head of research, credit, and US private equity at PitchBook, highlighted that pricing on new-issue loans in the US fell from SOFR plus 375 basis points in April to SOFR plus 365 basis points in May. Although this is approximately 10 basis points wider than in the first quarter, it remains tighter than most of 2024.
“As a result, borrowers approaching the market will find attractive spreads, especially high-quality companies from sectors isolated from tariff turbulence,” Lukatsky commented. Furthermore, the repricing of existing debt has re-emerged after the recent downturn.
By June, LCD had tracked $13 billion worth of deals, surpassing the combined figures from March through May.
Caution Among Lenders
Despite the positive developments, the current window may not be fully accessible to all borrowers. Sean Griffin, CEO and executive director at the LSTA, emphasized that many companies seeking to refinance or reprice debt in US dollars have already done so. Loan maturities do not pick up significantly until 2028, prompting lenders to scrutinize borrowers more carefully.
“If a company has a pending maturity and it hasn’t done anything about it until now, lenders may suspect there’s an issue with the credit, leading to wider pricing,” Griffin noted.
European Market Dynamics
Lukatsky also pointed out that the loan markets in the UK and other European countries have experienced similar declines and recoveries, akin to the US market. There has been a noticeable increase in loans trading above par, with more than a 40% rise by the end of May, indicating that repricing activity is resuming.
Notable repricing deals include those for Ion Marks, Valeo Foods, and Eir Telecom, which launched on June 16.
Optimism for M&A Activity
In terms of M&A activity, there is a sense of cautious optimism in Europe, with loan issuance supporting deals expected to be syndicated in the coming months. Noteworthy transactions include Advent’s bid for French insurance broker Kereis and Ardian’s investment in Diot-Siaci, a reinsurance brokerage and consulting group.
Year-over-year loan volume supporting M&A activity has more than doubled in 2025, with $13.3 billion recorded through June 13, compared to $6.1 billion during the same period in 2024.
Note: This article is inspired by content from https://gfmag.com/capital-raising-corporate-finance/corporate-loan-markets-us-europe-rebound-april-plunge/. It has been rephrased for originality. Images are credited to the original source.