The European High Yield market experienced an exceptional surge in activity throughout 2025, marking one of its most robust issuance periods of the decade. Annual volumes surged to an equivalent of EUR 132.1 billion, representing an 8.8% increase year on year. This activity comprised 263 tranches from 190 different issuers, a total surpassed only by the historic 2021 peak of EUR 151.5 billion during the era of zero interest rate policies (see graph).
While M&A activity, specifically sponsor to sponsor transactions did not fully meet initial industry projections, the sector still demonstrated significant growth. Conversely, private equity exits have remained stagnant since 2021. A persistent valuation gap between buyers and sellers has discouraged PE funds from realizing returns at lower prices. Consequently, firms are holding portfolio companies for record durations or utilizing continuation funds to manage assets while waiting for more favourable market conditions to exit.
