The Insight by Oaktree Capital Europe
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Jan 14, 2026 Nael Khatoun and Madelaine Jones join to discuss the European credit landscape. Nael highlights the stability of Europe’s economy, particularly noting the growth in Southern countries like Spain and Portugal due to tourism and tech. They dive into Germany’s investment challenges and the significance of local expertise in navigating Europe's complex markets. The discussion also explores shifting trends in private credit and the maturation of high-yield markets, while emphasizing the importance of selective credit analysis amidst rising demand.
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Conservative Corporate Positioning
- European corporates prioritized conservative balance-sheet management after COVID, Ukraine and LDI shocks.
- That conservatism has kept default rates low and left companies well financed.
Stability Fueled Direct Lending
- Stable monetary policy in 2025 supported record direct lending volume despite geopolitical noise.
- ECB and Bank of England guidance toward steady inflation reduced urgency for rate moves and aided refinancing activity.
Southern Europe Leads Growth
- Southern European economies (Spain, Portugal, Greece) outperformed due to resilient services like tourism and tech.
- Structural and regulatory changes, especially in Italy, are unlocking new private credit opportunities.