European corporate direct lending fundraising and deployment trends H1 2026

Conclusion

Arguments

1. 1

   Private debt fundraising remained healthy in 2025 and total capital raised is likely to reach 2024 levels. [1]

   high
2. 2

   European fundraising rebounded after a weaker 2024, as investors looked to diversify from the US. [2]

   high
3. 3

   Fundraising in the US weakened in 2025 while European private debt fundraising rebounded. [3]

   high
4. 4

   Evergreen funds including BDCs experienced strong fundraising, intensifying deployment pressure in direct lending. [4]

   high
5. 5

   Direct lending volumes remained within historical norms, but slower M&A and weak PE exits constrained LBO activity. [5]

   high
6. 6

   Refinancings, add-ons and dividend recaps continued to represent a substantial share of direct lending volume. [6]

   high

Limits

Deal-level terms, fund-level performance, and paywalled databases (PitchBook, LCD) not covered. H1 2026 granular European volume data may not yet be public.

CoverageStepStone published market research (2H25 direct lending trends) and corporate news (ELTIF launch). Topics: fundraising, volume mix, yields, credit risk, relative value.

Fund & Product Activity

Evergreen funds and BDCs continued strong fundraising, broadening the investor base beyond traditional institutions and reinforcing deployment pressure [^4]. StepStone received regulatory approval to launch a private debt ELTIF for European investors in February 2025, targeting Italy, Spain, Germany, France, and Nordic/Benelux markets [^10].

Credit Risk Watch

Borrower fundamentals improved incrementally; defaults rose from 2022 troughs but remain below historical averages [^8]. Returns softened modestly versus 2024 driven by lower base rates and tighter spreads rather than credit losses; gross yields remain 9–10% [^7].