2025 was a bumper, bumpy year.

As also flagged in our high yield wrap, it was a year of “mini-cycles”. But throughout, CLOs provided a solid bid to loans as CLO creation — yet again — outpaced new loan supply (spoiler alert: 2026 is shaping up for the same).

Repricings continued to shave margins as refis dominated. We even got some mega M&A; bankers will hope this is a sign of things to come next year.

Yes, Trump’s tariffs had a significant impact, prompting a market shutdown March and April.

But the market rebounded as European leveraged loans delivered one of the strongest issuance backdrops of the decade — amidst tariff and AI-related macro headlines which periodically forced lenders to reprice risk.

TL;DR

• Total FY 25 issuance reached about €255bn, marking the highest annual volume in the past five years. New-money transactions represented around 22% of activity, including private credit refinancing into the leveraged loan market, broadly consistent with 2024 levels
• Average euro margins compressed to 376bps in Q3 and Q4, reflecting continued repricing activity. This compares with roughly 400bps in 2024 and around 460bps in 2023. All-in yields at issuance also tightened to 5.9% in FY 25, down from 7.7% in FY 24, primarily driven by lower base rates, with Euribor falling to around 2% by December 2025
• LBO-related issuance climbed to about €25bn, the highest level since the €44bn peak in 2021, and nearly double the ~€13bn recorded in 2024
• Repricing transactions accounted for roughly 45% of volumes, up from 40% in 2024
• Credit sentiment weakened modestly, with fewer positive outlooks assigned and an increase in negative outlooks (139 in 2025 vs 114 in 2024). While the number of CFR downgrades remained broadly flat YoY at 134, while upgrades declined from 87 in 2024 to 67 in 2025
• European leveraged loan prices continue to be quoted mostly at or above par, with 76% of total TLBs quoted at or above 100. Average total returns remained positive at 5%, but declined from 9% in 2024 due to falling margins and all-in yields, alongside more frequent bouts of price volatility