Europe today presents one of the most structurally sound credit environments among developed markets, contrary to popular belief, according to KKR.<\/p>\n
KKR has been actively investing across the region for over 25 years, building local expertise in private equity, real assets, and credit.<\/p>\n
The start of 2025 has seen a meaningful pickup in activity across Europe, it pointed out. Following a muted 2023 and choppy 2024, many sponsors and issuers have returned to the market with renewed inspiration and urgency.<\/p>\n
In the latest update from Michael Small, partner in the firm\u2019s credit and markets business, he said headwinds such as a slowdown in M&A activity and renewed concerns over trade policy \u2013 most recently from the sharp tariff \u201cLiberation Day\u201d escalation \u2013 are not major concerns for Europe\u2019s private credit sector.<\/p>\n
They \u201chave added to broader market volatility and uncertainty, but do not appear to be slowing down the region\u2019s momentum\u201d, he said.<\/p>\n
In fact, European high yield and leveraged loans have outperformed their US counterparts during the recent market sell-off,\u201d Small pointed out.<\/p>\n
Read more:<\/strong> M&A will \u2018ramp more gradually than hoped\u2019, says KKR private credit head<\/a><\/p>\n One reason for this relative stability, according to KKR\u2019s analysis, is the lower proportion of daily liquidity vehicles, such as mutual funds and ETFs, in the European market.<\/p>\n This, Small said, has helped reduce the risk of sharp, flow-driven drawdowns that can be triggered by forced selling in more retail-heavy markets.<\/p>\n He pointed to a recent private equity deal for KKR to acquire Karo Healthcare from EQT in a take-private transaction. While not an IPO, Small said the deal reflects a \u201cclear market appetite for high-quality European assets\u201d, and speaks to investor conviction despite macro uncertainty.<\/p>\n \u201cJust as telling is the expected financing approach, which is likely to involve direct lenders, underscoring the growing role of non-bank capital providers as traditional bank appetite goes off risk,\u201d said Small.<\/p>\n