Europe’s private credit market is entering a stress test in 2026. Despite record fundraising levels, direct lenders face significant strain from maturing credit cycles. Heavy exposure to certain sectors, now under pressure from fast-moving AI disruption and oil price increases, is challenging private credit. Previous expectations for a rebound in M&A and LBO activity have tempered, with direct lenders now contending with rising credit stress, early loan deterioration, falling valuations and tighter lending standards. This keynote interview will explore the macro forces and credit dynamics shaping Europe’s private credit landscape. 

Private credit is working through a repositioning driven by its heavy exposure to the software sector. Once considered the most stable and predictable sector, software has become a key test case as rapid AI-driven disruption prompts a reassessment of valuations and challenges the durability of traditional SaaS models and underwriting assumptions. As a result, allocators are scrutinising lenders’ portfolios more closely as credit risk is beginning to normalise across the market. Panellists will discuss: 

• How is AI-driven disruption of software business models reshaping risk assessment in private credit portfolios? 
• What signals should allocators be watching as credit risk normalises?  
• Which sectors are emerging as more resilient opportunities in 2026? Where should lenders exercise the most caution?  
• How will oil price increases and recent volatility impact private credit activity? How will investor sentiment fair? 

The large-cap direct lending sector is poised to continue growing as private credit evolves beyond its middle-market roots. Yet this growth brings challenges including intensified competition with banks and margin compression pushing private credit lenders out of the biggest deals, leaving many with idle capital and a growing need to rebalance and deploy dry powder. At the same time, allocators are demanding clearer performance transparency and earlier indicators of signs of stress as credit strain emerges in pockets of the market. With successful exits for large-cap assets becoming harder to achieve amid persistent valuation gaps, a structural shortage of attractive large-cap M&A opportunities is forcing major lenders to look further down-market and diversify into smaller transactions. 

• With banks reclaiming the upper end of the market, how are large-cap direct lenders defending their position against the BSL market? 
• What sort of mid-market assets are typically large-cap investors looking towards as alternative investment opportunities? 
• As Payment-in-Kind (PIK) usage rises amid cash-flow pressure and tighter refinancing windows, does this represent healthy lender flexibility or early warnings signs of mounting credit stress? 
• From NAV lending to GP-led solutions, how are lenders adapting their underwriting to capture opportunity while mitigating risk? 

Private credit has become a defining force in today’s special situations, increasingly stepping in where traditional banks retrench, to provide flexible, fast and higher capital solutions. But as the asset class expands, its heavy concentration in software and SaaS lending is amplifying the scale and complexity of current restructuring cycles. As a result, private credit funds are taking a more hands-on approach to restructurings, often driving out‑of‑court solutions and, at times, pursuing loan‑to‑own strategies with their influence on outcomes growing. This panel will explore:  

• How are private credit funds positioning themselves to play a larger role in restructurings?  
• Will rising defaults will lead to more active control or “key taking”? 
• Which strategies are private credit funds using—PIK, deferred payments, control mechanisms—to manage and influence restructuring processes? 
• Will the more complex multi-party structures that include private credit result in more creative out-of-court solutions or even drive restructurings through court? 

As the global data centre market races towards a $1.5 trillion capital requirement by 2028, the traditional boundaries between real estate debt, infrastructure equity and structured finance have dissolved. This panel will discuss the 2026 landscape where asset-backed finance has become the primary bridge between high-growth AI developments and long-term institutional stability.  

• How are the traditional boundaries between structured finance, ABF and infrastructure equity blurring on data centre financing? 
• With the rise of ‘cradle-to-grave' financing, how are private credit funds coordinating the hand-off between short-term high-yield construction debt and long-term, investment-grade ABS? 
• To what extent are off-balance-sheet structures, like Meta’s $30 billion Hyperion project, becoming the industry standard for hyperscalers to scale AI infrastructure off of their own corporate balance sheets? 
• As AI hardware cycles compress to 3-5 years, how are lenders and rating agencies adjusting their underwriting to account for the risk of technical obsolescence?  

Distinguished by its lender-friendly structural protections, higher yields and lower competition from public markets, mid-market private credit deals are set to continue playing a significant role in the financing of small and medium-sized enterprises. While the strategy continues to attract strong capital flows, market stress is now most visible in the mid-market, where private credit’s heavy exposure to SaaS is driving more selective deployment.   

• As mid-market SaaS borrowers face higher leverage and rising default risks, are structural protections becoming more essential?  
• Are the lines between mid-market and large-cap lenders blurring as larger lenders move down-market? 
• With European banks aggressively launching dual-track origination models and JV partnerships with private credit funds, how has the competitive landscape for mid-market deals shifted? Is this narrowing the yield premium?  
• How are mid-market lenders evolving their documentation and inter-creditor agreements to protect themselves against ‘creditor-on-creditor- violence seen in larger capital structures?

Europe’s private credit secondaries market is set for strong growth as investors look to monetise positions against a backdrop of muted exit activity and increasingly because of software-related stress driving liquidity needs and repricing across portfolios. GP‑GP deals, especially multi‑asset continuation vehicles, are likely to dominate 2026 activity as managers recapitalise stressed credit pools and offer LP liquidity. Secondaries are fast becoming a core portfolio management tool for both liquidity and risk rebalancing. 

• Are secondaries now becoming a proactive portfolio‑management tool?  
• What is driving activity most; managing risk or primarily a response of the maturity wall for low-rate-era loans? 
• How will the entry of retail and private‑wealth capital via semi‑liquid and evergreen structures shape the secondaries landscape? 
• Does current European first‑lien pricing signal structurally higher credit quality, underpinned by tighter covenants and lower leverage, compared to the US?

As European credit stress heightens, LP allocations have evolved beyond the traditional focus on direct lending to become more selective, more senior secured and in more defensive sectors. Investors are also increasingly shifting toward asset‑backed strategies, specialised credit verticals and structurally innovative fund formats. Amid heightened competition for deployments and a rising emphasis on durability of returns, allocator discipline around manager selection has never been more pronounced. 

• How are LPs approaching asset‑backed finance?  
• As investors look to diversify away from corporate credit cycles, what frameworks are allocators using to assess risks, underwriting quality and collateral resilience across ABF strategies? 
• What’s driving LP interest in evergreen, semi‑liquid and hybrid structures?  
• What truly differentiates a manager today? What are LPs prioritising when selecting or re‑upping with managers in a crowded market?