Europe

Explore the Global Credit Outlook 2026: A concise overview of key trends in global credit markets, from macroeconomic shifts and corporate fundamentals to AI-driven investments and market opportunities. Gain insights to navigate the year ahead effectively.

European ABS investors saw just the second solar loan-backed deal price recently, a German offering titled Golden Ray 2. The transaction marks a further incremental development towards sustainable financing in the European securitisation market. It also comes at a time when the much larger and established US solar market has encountered headwinds.

As we approach the end of 2025, we have been taking stock of the key themes of the year and any lessons we can take from them. It has been a strong year for European high yield (HY) credit, with solid performance for the index as a whole and average yields compressed by around 40bp over the course of the year.

Nothing beats an 11-hour flight back to London for evaluating the outlook for collateralised loan obligations (CLOs), having attended the Opal CLO conference in California.

On Thursday, the European Central Bank (ECB) published a report setting out a number of proposals for simplifying the regulatory framework for banks.

October brought the first serious bout of volatility in corporate bond markets for some time, with two high-profile US bankruptcies raising fears of a more systemic issue in credit.

For some time now, collateralised loan obligations (CLOs) have in our view been one of the standout risk-adjusted opportunities in all of fixed income, and in recent years (including this one) their performance has lived up to that billing.

This year will go down as an important period for the European insurance sector, which is concluding its effort to phase out capital instruments issued under the old Solvency I framework and replace them with more modern Solvency II structures.

Amid tariffs, bankruptcies, and uncertainty, credit fundamentals remain strong. Elevated yields and solid corporate balance sheets favour income-focused fixed income strategies over government bonds, even as volatility persists.

Oil prices have been gathering headlines in the last few weeks. After falling below the $60 per barrel mark, the West Texas Intermediate price (WTI) bounced back strongly as a result of fresh sanctions announced against the two Russian giants, Lukoil and Rosneft.

AI-driven momentum trades and non-US value dominated markets in 2025. However, the sustainability of these trends remains uncertain, particularly given unproven ROI of AI investments. Amid this backdrop, quality stocks emerge as a prudent choice, offering both resilience and steady growth potential.

France’s chronic government paralysis repeatedly created headlines this month, and fixed income markets are rightly worried about the sustainability of French government borrowing levels. Meanwhile, forecasts of a £50bn blackhole in the UK’s public finances are keeping gilt yields elevated and have made this November’s UK Budget a potential flashpoint.