The European High Yield market is experiencing a notable surge in issuances aimed at financing dividends, known as dividend recaps. In 2025, these transactions represent nearly 8% of total issued volume, compared to the 0-2% range observed between 2019 and 2023 and 6% in 2024. June recorded a record volume of €3.7 billion, equivalent to 15% of euro-denominated High Yield issuances in that month. Dividend recaps have re-emerged as a key strategic tool for private equity sponsors in an environment where exits (sales or IPOs) have slowed down. Historically, this type of transaction has generated reluctance among debt investors, as it increases leverage to compensate shareholders.
In parallel, issuances linked to leveraged buyouts have decreased, representing only 7% of the European High Yield market in 2024 and year-to-date 2025, compared to the 12-18% range between 2021 and 2023.
