The Credit Edge by Bloomberg Intelligence Arini Says European Private Credit Has the Edge Over US Market
Nov 26, 2025
Mathew Cestar, president of Arini and seasoned credit expert, discusses the rising attraction of European private credit amidst shrinking US returns. He highlights Europe’s 50 basis point premium on loans, driven by the complexity of middle-market, non-sponsor deals. Cestar elaborates on borrowers favoring tailored private solutions over banks, and the unique opportunities in sectors like defense. He also shares insights on managing risks, the importance of regulatory transparency, and the strategic focus on senior middle-market loans for optimal returns.
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Europe’s Middle Market Offers Extra Spread
- Arini sees more value in European middle-market private credit than in US large-cap private lending.
- Europe pays ~50bp more than the US and middle-market deals add another ~50–150bp of spread.
Pick The Sweet Spot Size
- Target facility sizes €100–€400m to avoid cheap local bank deals and large public-market competition.
- Focus on non-sponsor corporates to capture higher spreads and stronger document control.
Complexity Pays In Europe
- European deals reward investors for complexity: multiple jurisdictions and languages boost spreads.
- That complexity also allows lenders to design stronger, bespoke credit agreements.