The syndicated loan market in CEEMEA demonstrated its adaptability in 2024, weathering global uncertainties including political changes, escalating geopolitical tensions and a tempering in interest rates.

But after a challenging year, market participants are hopeful for a rebound, albeit a modest one, in activity over the next 12 months as market conditions show the potential to become more conducive.

Across CEEMEA, USD 180bn was raised in the syndicated loan market in 2024, marking a 24% decrease in volume compared to 2023, according to Dealogic data.

Loan volumes were described as “notably subdued” compared to previous years, according to Benny Zachariah, head of CEEMEA loan syndicate at JPMorgan, who added that this trend continues a decline that began in 2022.

“Geopolitical tensions, ongoing conflicts, and macroeconomic concerns have significantly impacted activity across the CEEMEA region,” Zachariah said, adding that over 60 national elections across various countries had created a spectre of uncertainty in the loan market.

However, there is hope that the market will perform better in 2025. “As these political landscapes stabilise, there is potential for improved financing conditions and a resurgence in M&A activity,” Zachariah said.

Resilient MENA

One region in which activity is expected to continue flourishing is the Middle East — in particular, in the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia. The region has “remained active and robust in terms of loan activity and volumes,” Zachariah continued.

Nicolas Rabier, co-head of investment grade finance, loan capital markets EMEA at BNP Paribas, agreed that the Middle East has done much of the heavy lifting across CEEMEA.

Although volumes across the broader EMEA region have seen a pick-up, that has not been the case in CEEMEA. The Gulf region has had to compensate for lower volumes in other parts of the region, such as in Central and Eastern Europe (CEE), where volumes declined, Rabier said.

Zain Zaidi, head of UK, Europe, and MEA loans products & execution at Citi, concurred and highlighted the resilience of borrowers from this region. “It has been a healthy year for the MENA loan market, with around USD 110bn of new loans, which makes this the fourth year in a row of over USD 100bn in volume,” he said.

“We expect issuance in 2025 to be on par or higher, with a number of maturities approaching and potential large acquisitions,” Zaidi said, adding that Saudi borrowers constituted 60% of all deals from the region. It would be surprising if Saudi is not the top borrower again in 2025, he continued.

The sovereign wealth fund, the Public Investment Fund, offered a standout deal. In July, the Fund signed a USD 15bn three-year revolving credit facility, which, according to Zaidi, was the largest revolver globally and the largest deal in the MENA region this year.

Infrastructure-related funding has also drawn several borrowers from the Kingdom into the market. Meanwhile, regional banks are also eager to expand their balance sheet capacity and are increasingly focusing on long-term project financing, according to Aydin Emek, head of loan syndicate and distribution at HSBC.

Driving the resilience in Gulf loan volumes is a surplus of cash in the local banking market, Emek noted.

“It is an opportunistic market right now, leaning towards the regional lenders benefiting from the liquidity position in the GCC,” he said. “Margins across the region are quite tight and the expectation is that the Fed will bring down the base rate and therefore decrease overall borrowing costs. We are definitely in a borrower’s market.”

That excess liquidity is starting to spill over into opportunities outside of the region. National champions in the Gulf are looking towards transactions in Europe, Asia and the US, Emek highlighted.

“We have seen UAE banks become more active in the African and Asian FIG space, with lenders keen to deploy more Middle East liquidity outside of the region,” he said.

Agrobank, an Uzbekistan-based lender, is one of those examples. The lender secured an USD 88m syndicated term loan from UAE-based Mashreq in February this year, before entering the market later in the year to secure a multi-currency facility. Local lenders in the Middle East were again active on that facility, according to one source familiar with the situation.

Pricing is only likely to continue tightening in 2025, according to BNP’s Rabier, given the competitive environment among local lenders.

HSBC’s Emek concurred, noting that there remains an imbalance between the number of deals in the market versus the liquidity position of local lenders, adding that the majority of international banks in the region are looking at more event-driven transactions.

Need for caution

Despite the enthusiasm for more deals in the MENA region, the high level of liquidity in the system has enabled transactions that go beyond typical market dynamics. That has raised concerns among some market participants.

“There is a lot of cheap liquidity, which means some aggressive transactions are getting done. There have been a number of highly levered borrowers in the market this year — if those borrowers struggle with the covenants or payments on such transactions, they could need restructuring solutions when the market sentiment changes negatively,” Emek said.

GEMS Education, a UAE-headquartered private education provider this year secured a USD 3.25bn sustainability-linked syndicated loan. The deal was launched into syndication in late July, at which point its net debt-to-EBTIDA ratio was in excess of 7x.

“Across the region, pricing has been compressing and leverage has been increasing — for a while it appeared that the market would absorb every deal, regardless of what they looked like,” Citi’s Zaidi said. “But some transactions this year demonstrated that the market is pushing back, especially with highly levered corporate names.”

Despite the seemingly abundant liquidity, the region does face a number of potential headwinds. The incoming Donald Trump administration could enact policies that lead to a drop in oil prices, which could impact how many excess petrodollars there are in the region that have been driving the aggressive lending behaviour.

But that could be offset by potential volatility in the debt capital markets next year, depending on how inflationary the Trump administration’s policies turn out to be. That, Zaidi said, could be a driver of an increase in loan activity across CEEMEA, with volumes having the potential to touch USD 200bn next year.

HSBC’s Emek expects MENA volumes in 2025 to be broadly in line with 2024, with the potential for a maximum growth of 10%.

Notably, market participants have pointed to a reduced appetite for sustainability-linked loans as a result of growing scrutiny from various parties on how KPI-linked deals were being structured.

Use-of-proceed facilities however remain a popular choice for borrowers seeking ESG-friendly structures, Emek noted. “They are easier to structure compared to sustainability-linked loans, provided the borrower has a sustainable agenda.”

Note: includes green and sustainability-linked loans

CEE — volume stability

The Central and Eastern Europe syndicated loan market demonstrated stability in 2024, generating over EUR 30bn in announced deals, according to Gunter Deuber, managing director and head of research at Raiffeisen Bank International.

While this figure falls short of 2023’s EUR 50bn, it remains comparable to 2022 volumes.

“The general borrower-friendlier credit spread environment helped grease the wheels in the CEE syndicated loan market,” Deuber said, highlighting the favourable conditions despite a less robust year-on-year performance.

Activity in 2024 leaned towards diversification, with fewer large-scale projects dominating the landscape.

Unlike previous years that featured prominent deals like Polish Baltic Power‘s USD 4.7bn multi-tranche term loan, 2024 saw greater granularity across individual countries and sectors, according to Deuber.

Czechoslovak Group‘s USD 1.6bn leveraged facility to support the acquisition of Kinetic Group and EP Infrastructure‘s USD 309m facility were an exception, rather than the rule, noted Deuber.

However, amongst standout deals in the region was PKN Orlen‘s EUR 2bn credit facility, secured from a 16-bank syndicate.

Refinancing and amend-and-extend transactions drove much of the activity, complemented by a rise in acquisition financing, Deuber continued.

Looking ahead to 2025, Deuber identified monetary easing and refinancing needs — estimated at EUR 15bn-EUR 20bn — as key drivers for loan demand.

Larger markets such as the Republic of Poland, Czechia, Hungary, and Romania are expected to remain central to this demand, though smaller players like the Slovak Republic, Republic of Bulgaria, and the Republic of Serbia could exhibit renewed vigour, according to Deuber.

“We are also seeing more FIG activity from the former CIS (Commonwealth of Independent States) region, as it continues to pivot away from Russian liquidity and towards lenders in Europe, the US, the Middle East and China,” noted Zaidi.

From a sectoral perspective, utilities and energy are poised to maintain their dominance, accounting for around 50% of CEE deal volumes in 2024, with renewable energy projects, including solar and wind, likely to attract significant attention, continuing to generate the lion’s share of sustainable finance, according to Deuber.

Green and sustainability-linked loans, which represented 25%-35% of syndications from 2022-2024, are expected to retain their popularity in 2025. However, economic headwinds in Germany may dampen project finance prospects for countries integrated into German value chains, such as Czechia and Hungary, he continued.

On the supply side, foreign lenders remain well-entrenched in CEE markets.

“Among major cross-border creditors, we expect Austrian, French and German banks to keep their appetite to CEE corporate borrowers, which would also be a reflection of the FDI (foreign direct investment) and trade flows,” said Deuber.

Additionally, Asian banks, particularly from the Republic of Korea, the People’s Republic of China and Japan are playing an increasingly pivotal role in export/import-linked financing, particularly for projects like EV battery plants in Hungary, according to Deuber, who cautioned that geopolitical risks could impact this dynamic.

SSA finds solutions

Sub-Saharan Africa faced a challenging year, with syndicated loan volumes muted, according to Sanaa Tabani, head of loan syndicate Africa at Standard Chartered Bank.

“2024 has been an interesting year for Sub-Saharan Africa loan markets,’ Tabani said. “We have seen total market volumes down about 50% YoY from cUSD 39bn in 2023 to cUSD 19bn 2024 YTD, however the strong flow of transactions since Q2 and pent-up loan investor demand paints a different picture.”

This decline can be attributed to macroeconomic challenges and rising interest rates, which have affected banks’ cost of funds and borrowers’ repayment capacity, Tabani noted.

“While Africa loan markets have seen an increased level of risk caution from investors, this has driven stronger emphasis on structure and pricing,” Tabani said.

Borrowers and investors have responded to these market conditions by utilising risk mitigation tools like multilateral guarantees and credit risk insurance, which have helped ensure successful syndications, she said.

“Through DFI (development finance institution) guaranteed transactions, a number of sovereign and FI (financial institution) borrowers have been able to access typically longer tenor liquidity from a wider pool of international banks that have taken a more cautious approach, which is now focused on covered loans,” Tabani continued.

Nigeria-based Bank of Industry‘s EUR 1.9bn syndicated loan, anchored by a guarantee from the Africa Finance Corporation, provided a compelling example, Tabani noted.

“We expect most of the above trends to continue into 2025 barring any major adverse market events,” Tabani said. “African loan markets remain resilient [and they] provide an opportunity for investors looking to balance measured risk with well-structured high-yielding loan assets.”

Separately, Debtwire recently reported that the Republic of Tanzania‘s Standard Gauge Railway (SGR) project loan, supported by an African Development Bank (AfDB) guarantee, along with the Republic of Cote d’Ivoire‘s recently announced MIGA-backed loan — which is also anticipated to have a long tenor — illustrates the vital role that DFIs play in facilitating such deals, two sources familiar with the situation noted.

Matome Modiba, head of Africa syndications at Absa, also believes that such deals — especially those involving sovereigns — are likely to persist into 2025. This expectation is primarily driven by the pressing need for many countries to develop their infrastructure, he said.

“The main reason sovereign loans have been a dominant trend is that the [loans in] question usually end up being utilised for much-needed infrastructure investment in each of the countries,” Modiba noted.

Africa continues to face a significant infrastructure deficit that urgently needs to be addressed. According to the AfDB, the continent requires between USD 130bn and USD 170bn annually for infrastructure development, yet there remains an annual financing gap of USD 68bn to USD 108bn.

While capital is available for these projects, the obstacle lies in ensuring it is channelled into the right areas and that credit risk is effectively mitigated, according to JPMorgan’s Zachariah.

Going into 2025, however, innovative financial structures, such as those highlighted in the aforementioned deals, are expected to be crucial in mobilising private capital, Zachariah noted.

“With 500m people expected to migrate from rural areas by 2040, Africa is the fastest urbanising region globally, necessitating significant infrastructure development in sectors such as energy, transportation, healthcare, and education,” Zachariah said.

“Large infrastructure projects, due to their extended construction periods, are more suited to the loan market than the bond market. The challenge lies not in the availability of global liquidity but in effectively channeling it to high-impact projects. Improved market conditions could also lead to increased deal-making and event-driven activities across Africa, a trend that is already beginning to emerge,” he added.