The newly imposed 15% US tariff on European imports has dominated the headlines this summer. Less remarked upon is how European private credit has responded — not by freezing, but by adapting. Refinancings and recapitalisations now account for roughly 48% of all European private credit volume this year, and the market's behaviour tells a more measured story than the headlines suggest.
Three observations.
The first is that refinancing is keeping capital in motion. Refis and recaps make up close to half of European private credit volume in 2025, with refinancing deal count up some 30% year on year even as the M&A pipeline thins. Sponsors are buying time, locking in terms and positioning for the next cycle rather than waiting for it to arrive.
The second is that discipline has not loosened, even as spreads have tightened. Large-cap pricing moved from around 550 to 500 basis points over the last quarter, and mid-cap from roughly 630 to 560. But lenders are not chasing volume: they are adding covenant cushions and pricing for resilience rather than walking away. Tighter spreads and tighter terms now coexist — the mark of a market repricing risk deliberately, not capitulating.
The third is that capital is rotating rather than retreating. More than 40% of first-half deal flow concentrated in software, business services and healthcare, where recurring revenues of 85 to 90% or more continue to command the best terms. Industrials and manufacturing, more exposed to tariffs, now carry a premium that reflects that exposure directly.
The conclusion is straightforward. Tariffs do not kill private credit; they redraw its map. The advantage in such a market does not belong to the largest participants by default — it belongs to those who read the shift early and respond before the headlines force the issue.
Laetitia Costa, Founder
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