European direct lending held steady in the first quarter of 2026, with deal volumes on par with the levels seen in recent quarters even as the number of transactions dropped, according to Debtwire‘s 1Q26 direct lender rankings report.

Direct lending volumes in Europe amounted to EUR 31.7bn across 264 deals in 1Q26, up 55% compared with the EUR 20.43bn spread across 288 deals in 1Q25, according to Debtwire data.

Compared with 4Q25, when EUR 29.26bn were deployed across 419 transactions, deal volumes were up slightly in 1Q26 even as the number of deals fell steeply.

Large cap transactions including Global Sport Group’s recapitalisation of its EUR 2.2bn debt facility and TK Elevator’s EUR 1.8bn refinancing – both of which now rank among the 15 largest direct-lending deals on record – helped prop up deal volumes amid a more general slowdown in M&A activity in Europe in 1Q26.

The prominence of these large cap deals also suggests direct lenders have successfully taken advantage of the volatility seen in 1Q to reclaim some market share from the syndicated markets. Institutional loan and high-yield bond issuances contracted year-on-year, amounting to EUR 99.1bn in 1Q26, down from EUR 123bn the same quarter last year.

For both private credit and the public debt markets, refinancings accounted for a substantial portion of activity in 1Q26, with around 42% of direct lending proceeds in 1Q26 earmarked for refinancings versus 27% for traditional LBO financing. Around 86% of institutional loan issuances in 1Q26 meanwhile were allocated for refinancings.

In terms of sectors, technology once again remained the most dominant space for direct lenders in 1Q26, accounting for around EUR 6.44bn of deal volumes, indicating that the sector retains its appeal for direct lenders against ongoing concerns over the potential impact of AI on software credits.

Margins on direct-lending unitranches meanwhile barely budged quarter-on-quarter, falling ever so slightly to an average margin of 547bps over the reference rate, compared with 552bps over the reference rate in 4Q25.

Any efforts from direct lenders to push through higher pricing in 1Q26 appear to have been stymied by the overarching deployment pressure on funds, the availability of cheaper pricing in the syndicated markets as well as the overall smaller pool of opportunities available to deploy capital.

Fundraising likewise contracted in 1Q26, with direct lenders collectively raising EUR 8.6bn in 1Q26, down from the EUR 21.3bn raised in 1Q25. Still, given the industry hoovered up a record EUR 69.6bn in 2025, this likely reflects that private credit providers cooled off on their fundraising activities in 1Q26 following last year’s record haul, rather than a material shift in LP allocations away from the asset class.

Among direct lenders, Ares claimed the top spot in Debtwire’s 1Q26 European Direct Lender Rankings, reporting 12 new deals accounting for roughly 6.42% of the market. Arcmont placed second with 10 deals and 5.35% market share, while Apollo, CVI, Hayfin and Investec Private Debt followed in a four-way tie for third place, with nine deals each and a market share of 4.81% apiece in 1Q26.

Including add-on financings, Ares extended its lead in 1Q26, registering 28 deals that give it a total market share of 11.07%. Arcmont came in second place with 16 deals and a market share of 6.32%, followed by Muzinich with 12 deals and a market share of 4.74%.

In terms of ESG-linked deals, Eurazeo led the pack in 1Q26, with its eight transactions giving it a 19.51% share of the ESG market. Pemberton followed with seven deals and an ESG market share of around 17.07%.

In the large cap space, Ares and Arcmont tied for first place in terms of debt count, reporting six deals each for a market share of 14.63%. Apollo and Goldman Sachs Private Credit tied for third place with five deals and a 12.2% share of the large-cap market apiece.

Pemberton meanwhile comes out on top in the midmarket, financing eight deals that give it a 13.33% share of the midcap space. Hayfin followed second with six deals and a 10% share of the midmarket, followed by Ares with five deals and a market share of 8.33%.

In the small cap space, CVI topped the rankings with nine deals accounting for a 14.52% share of the market. Fiduciam placed second with six deals and a 9.68% market share, while Eurazeo and Muzinich tied for third, with each reporting four deals for a 6.45% share of the small cap market.

A different set of funds emerge on top when accounting for deal size in 1Q26. In the large cap space, Blackstone Credit comes out on top with a deal value of EUR 2.88bn, or 20.14% of the large cap space, followed by Ares in second with EUR 1.61bn in large cap deal volumes and Park Square with EUR 1.24bn.

In the midmarket, Hayfin comes in first with EUR 1.22bn in midcap deal volume and a 12.19% share of the market, followed by Apollo with EUR 1.1bn and Ares with EUR 0.98bn in midmarket deal volumes. Hercules Capital heads up the small-cap deal volume rankings meanwhile, with EUR 0.27bn in deal volume, accounting for 10.57% of the small cap space.

Debtwire’s direct lender rankings highlight the key players in the private debt market. The report contains active direct lender fund rankings, along with market analysis.