The ever-resilient loan market was once again forced to demonstrate its mettle this year, battling against a backdrop of lower global dealmaking, broader macroeconomic uncertainty and an exceptionally lucrative bond market. According to Dealogic data, loan volumes across the CEEMEA region so far this year total around USD 230bn-equivalent, compared to USD 256bn-equivalent by the end of 2024.

Ivan Starcevic, head of strategic loans and loan syndicate, CEEMEA at Citi conceded that the drop in volumes was underpinned by a decrease in M&A activity – naturally sparser and more lumpy in CEEMEA relative to the US and EMEA – combined with a broader shift among borrowers to the debt capital markets. In contrast, total year-on-year regional bond volumes are up around 19%, according to Dealogic.

The issue, Starcevic highlighted, is not a lack of demand, but a lack of supply. “The global M&A market is expected to grow in 2026, which should filter into the regional loan markets. We do not anticipate overall loan volumes to be lower in 2026 versus 2025.”

Some large transactions that were meant to bolster volumes – such as an acquisition-related financing for Abu Dhabi National Oil Company’s (ADNOC) USD 18.7bn bid for Australian gas giant Santos – did not materialise.

However, other sizeable deals across the Middle East and Central and Eastern Europe (CEE), in particular, helped to buoy overall activity. Part of the funding for Saudi Aramco’s Jafurah asset monetisation came to the loan market, topping charts as the largest regional deal this year at USD 8.3bn. Similarly, multi-billion euro financings for renewable energy projects Baltyk 2 and 3 added further momentum.

Of the market participants polled by Debtwire, most shared a broadly sanguine sentiment that the market will regain ground in 2026.

The fundamentals point to steadier sentiment, the potential return of M&A that was delayed this year and more strategic transactions from sovereigns, sovereign wealth funds and national champions who now use loans as a flexible part of their funding mix, according to Benny Zachariah, head of CEEMEA loan syndicate at JPMorgan.

“We are optimistic about 2026,” said Zachariah. “The wider CEEMEA region has shown repeatedly that even in difficult conditions, activity resets as soon as there is a clearer macro signal.”

The market indicates that the European Central Bank is unlikely to cut rates at its December meeting, with only one further potential reduction expected in 2026, suggesting a clearer rates picture for the coming year. The Federal Reserve, by contrast, is widely expected to lower its key rate by 25bps in December, though questions remain over how far it can ease policy in 2026 given that inflation remains above targets in the US.

The CEEMEA region, anchored by strong investment grade and diversification-hungry sovereigns in the Gulf, mammoth renewable energy capex needs in CEE and large infrastructure financing gaps in Africa, presents a conducive environment for large balance sheet deployment.

“CEEMEA is undergoing a major transformation driven by strong economic growth, infrastructure development, energy transition and evolving regulations,” said Hitesh Asarpota, chief executive officer at Emirates NBD Capital. “These shifts, alongside sizeable refinancing needs and firm demand from financial institutions, utilities and the technology sector, are set to drive strong loan market activity through 2026.”

Gulf continues to outpace peers

Perhaps unsurprisingly, the Middle East is expected to continue providing a large chunk of that activity, with Emirate NBD’s Asarpota noting that the United Arab Emirates (UAE) and Saudi Arabia will remain central to regional loan growth in the coming year.

With Vision 2030 and a number of giga-projects still in the works, the Kingdom will be persistent in tapping both loan and bond markets alike.

Saudi Arabian borrowers constituted a roughly 23% market share of CEEMEA this year, according to Dealogic, while the UAE followed with 18% and Turkey with 13%. Poland was the fourth biggest producer of volumes, with a roughly 8% market share.

Amid subdued commodity prices, constrained ADRs (advance-to-deposit ratio) in the Saudi banking sector and historically elevated local benchmarks, Asarpota anticipated a rise in US dollar loan volumes in 2026, offering greater hedging opportunities for longer-tenor loans, particularly within the infrastructure and project finance space.

Despite stagnation in other parts of the market, the Gulf – both via its borrowers and its lenders – is evolving as one of the most dynamic emerging market regions.

The regional bank market has shown resilience, underpinned by strong liquidity and ambitious asset growth agendas, despite geopolitical and macroeconomic volatility, according to Rita Korkmaz, head of syndicated loans and leveraged finance, MENAT at HSBC.

That has resulted in continued balance sheet deployment across the credit spectrum at competitive terms, including longer tenors and borrower-friendly structures.

Middle East borrowers and lenders venture out, risk appetite on the rise

Increased activity in the MENA-Asia corridor is a key emerging theme, with regional borrowers raising landmark and oversubscribed Asia-focused syndicated facilities this year, Korkmaz continued. ADQ has been heralded as setting a benchmark in that space.

The Abu Dhabi-based sovereign wealth fund this year raised a USD 5bn Asia-focused facility, with syndication attracting appetite from over 30 financial institutions across mainland China, Hong Kong, Macau and Taiwan. That, Korkmaz said, allowed ADQ to upsize from an initial launch amount of USD 4bn.

The deal underlined a broader point for CEEMEA, according to Zachariah at JPMorgan, who also acted on the deal. “The region is no longer dependent on one pool of liquidity. With the right positioning and the right structure, borrowers can access depth across continents.”

The scale of demand demonstrated that the cross-regional connectivity between the two regions is deepening, and that size can be achieved when the story is strong and the execution is disciplined, Zachariah continued.

Qatar National Bank, one of the largest banks in the region, also closed a USD 2bn debut Asian syndicated term loan facility.

Borrowers in the Gulf are actively reaching out to Asian lenders, according to Citi’s Starcevic, with sovereigns and government-related entities, in particular, from countries such as the UAE and Qatar, attracting increased liquidity from Chinese lenders. That is expected to become a strong trend, especially for the region’s investment grade borrowers.

But, it is not just the region’s borrowers that are expanding geographically.

The Gulf’s banks have solidified themselves as critical components of the evolving lending space in jurisdictions such as Turkey and even further into frontier markets.

The return of risk appetite in different forms has been a clear theme this year, according to Zachariah. With subdued overall volumes, banks travelled further down the credit curve into BB and B plus territory, extending tenors beyond the traditional five-year anchor, while exploring new geographies. Some lenders also moved down the capital structure into holding company and subordinated formats.

Many of Turkey’s banks were this year able to extend the tenors of their loan facilities, with some such as Akbank managing to add on three-year tranches when refinancing their existing debt. Additional transactions, including a five-year facility for Ulker Biskuvi and a debut term financing for Istanbul Metropolitan Municipality, highlight the enhanced appetite for Turkish credit, Emirates NBD’s Asarpota highlighted.

Central Asia has also been a recipient of that increased risk appetite.

In fact, nowhere is that seen more visibly than in the ability of the International Bank of Azerbaijan to return to the loan market. The majority state-owned bank raised a USD 200m loan, led by a cohort of primarily UAE-based banks, almost a decade after a default and debt restructuring left many market participants burned.

Underpinned by ample liquidity and a relative shortage of high-yielding assets at home, the UAE’s lenders have identified geographies such as Turkey, Central Asia and the Commonwealth of Independent States (CIS) as lucrative hotspots for new business, seeking to expand their deployments. Market participants say it is just the beginning.

This year, Asakabank, ForteBank and Xalq Banki were among the borrowers that raised financing from Gulf-based lenders.

Borrowers in countries such as Azerbaijan and Kazakhstan continue to offer a relative pick-up when compared to similarly-rated credit risk in other emerging market jurisdictions, Citi’s Starcevic highlighted.

The State Oil Company of the Republic of Azerbaijan signed a USD 500m loan facility in July in a deal led by Citi, with indications that it is already hungry for more hard currency funding in the loan market.

Robust local liquidity drives tight pricing

Much of the CEEMEA loan market continues to benefit from tight pricing, driven by robust local liquidity in jurisdictions such as the Middle East and CEE, and fierce competition among lenders for a limited pool of high-quality deals.

Pricing is far from homogenous, however, JPMorgan’s Zachariah highlighted, with levels between similarly-rated borrowers in the Middle East and CEE diverging based on regional idiosyncrasies. That divergence is set to continue, with the top end of the credit spectrum remaining competitive – especially where liquidity is concentrated – while mid-tier and lower-rated borrowers will still need to offer structure, security or blended elements to attract depth, Zachariah continued.

Pricing is expected to remain tight across CEE, however.

Despite macroeconomic instability and increased geopolitical risk during 2025, including the war in Ukraine, the loan market has remained a resilient and reliable source of funding for borrowers, according to Nicolas Rabier, co-head of investment grade finance, loan capital markets, EMEA at BNP Paribas.

“From where we stand, it is hard to expect much improvement for credit spreads from their current rather benign level. Having said that, the stabilized EUR policy rate and a steadier global environment (assuming no further grand changes in the US trade policies) should be supportive to companies’ credit demand in 2026, including on the M&A front,” according to Gunter Deuber, head of research, and Ruslan Gadeev, fixed income & ESG research at Raiffeisen Bank International.

While many anticipate limited changes to pricing dynamics in the new year, there is potential for evolution. “Any deterioration in debt capital markets could result in borrowers becoming more reliant on loan markets and use of banks’ balance sheets, and this could in turn lead to an increase in pricing in the loan market,” said Rabier.

Renewables, defense opportunities in CEE

CEE deal volumes in 2025 remained elevated at USD 69.5bn-equivalent, closing in on 2024’s USD 72.4bn-equivalent and 2023’s USD 71.9bn-equivalent volumes, according to Dealogic.

The increase in CEE aggregate deal size reflects a broad-based revival of syndicated transactions in the region, including the well-present sustainable finance facilities, at around 38% of the total, with an 80/20 split between green and sustainability-linked loans, according to RBI’s Deuber and Gadeev.

“The latter largely stemmed from large-scale project finance deals in the renewables sector, including, among others, a further phase-in of offshore windfarms in Poland, which […] served as a good example of joint public and private financing,” said Deuber and Gadeev.

Baltic Power, a joint venture between PKN Orlen and Northland Power to develop and manage an offshore windfarm, secured a syndicated credit facility through a consortium of international banks in 2024 with further syndicated deals being explored as a possibility. The European Investment Bank (EIB) will contribute EUR 600m towards the completion of BC-Wind, a 390 MW offshore windfarm, whilst Baltic Power shareholder Orlen secured PLN 3.5 billion from the National Recovery Plan.

In addition to traditional deal flow, pockets of opportunity have emerged in areas such as the defense sector, where the pursuit of pricing premiums has driven large transactions.

With large increases in defense spending in both CEE and the Gulf, 2026 could bring “sizeable opportunities” from this sector for both the loan and debt capital markets, BNP Paribas’ Rabier said.

After placing a Eurobond earlier in the year, Czechoslovak Group entered the loan market with a jumbo EUR 1.85bn transaction. A remainder EUR 1bn of the whole transaction is expected to close in 2026.

In addition to defense, the energy and utility sectors are also expected to dominate deal flow. The capex requirements in that sector are large, according to Rabier, who noted they are starting to have more conversations with borrowers around consolidation in that sector.

The evolving competition between banks and private credit providers has the potential to reshape the syndicated loan market, with both sides vying for market share.

Rabier argued that significant growth in CEEMEA private credit can be expected over the next five years, with sectors such as real estate, artificial intelligence and utilities to be primary targets.

But fear of private credit replacing the bank market is far on the horizon

“Having said this, private credit will still only represent a small portion of the overall lending market in the region given that it is well-served by strongly capitalised local and international banks,” Rabier said.

MDB, DFI deals boost Africa volumes

Africa contributed around 18% of total loan volumes across CEEMEA, characterised by the growing reliance of sovereign borrowers on multilateral-backed loans to support government budgets and secure long-term financing.

Cote d’Ivoire, for example, secured a EUR 433.3m sustainability-linked loan from Standard Chartered earlier this year under the newly introduced Sustainability-Linked Finance framework. The facility is supported by guarantees from the World Bank Group, via the International Bank for Reconstruction and Development, IBRD, and the Multilateral Investment Guarantee Agency, MIGA, reflecting a growing reliance on credit-enhancement tools to unlock affordable capital.

Meanwhile, Rwanda is seeking a loan of up to USD 200m in a potential World Bank-backed deal, as Debtwire reported. By leveraging multilateral bank guarantees, borrowers are increasingly able to stretch the tenor of their financing – a key consideration for sovereigns managing substantial refinancing needs.

“In 2026, we believe borrowers will continue with their two main objectives – to maximise liquidity from their funding initiatives and optimise their cost of funding,” said Wola Asase, deputy director and head of loan syndication at Africa Finance Corporation (AFC). “As the structure becomes more mainstream, we expect to see both repeat borrowers and new borrowers get into the market for guaranteed deals.”

Partnerships, particularly with the insurance sector, and the use of credit enhancements and guarantees are set to play a larger role in the region in 2026.

Elsewhere, infrastructure is expected to attract substantial DFI (development finance institution) funding in Africa next year, AFC’s Asase said.

The continent continues to face a significant infrastructure deficit, with estimates suggesting it requires between USD 130bn-USD 170bn annually just to meet basic development needs.

Tanzania’s large-scale Standard Gauge Railway project offers a notable example of how DFI involvement can support transformational infrastructure. Debtwire reported that the sovereign’s USD 1.2bn loan to finance the project will be partially guaranteed by the African Development Bank.

Asase at AFC estimated that infrastructure-led financing will continue to be the bulk of the use of proceeds for DFI-related financing on the continent. “These transactions will come from both the sovereigns as borrowers, but also increasingly, from the private sector, as they start to develop an appetite for long-term project financing, while DFIs come in with risk mitigation and credit enhancement tools.”