Technical tidal wave drives European loan spreads to nine-year tights
Key takeaways
- Borrowers have taken full advantage, cutting the cost of their debt aggressively as repriced and new-money spreads converge.
- The limits of the repricing wave were illustrated recently when CVC-backed Mehilainen repriced its €1.86 billion term loan at E+300 — a 50 bps cut, but short of the E+275 that some B2/B rated borrowers have attempted.
- The pattern is consistent across the late spring wave.
Technical tidal wave drives European loan spreads to nine-year tights David Cox Wed, June 17, 2026 at 5:04 PM GMT+7 8 min read European loan spreads have hit their tightest levels since 2017 as record CLO demand has outpaced supply. Borrowers have taken full advantage, cutting the cost of their debt aggressively as repriced and new-money spreads converge. With new-issue supply expected to stay thin ahead of the late-summer break, there are signs that pricing is testing the limits of investor tolerance.
The limits of the repricing wave were illustrated recently when CVC-backed Mehilainen repriced its €1.86 billion term loan at E+300 — a 50 bps cut, but short of the E+275 that some B2/B rated borrowers have attempted. Initial talk of E+300-325 was revised tighter to E+275-300, before the market settled at the wide end of the revised talk. “Fifty basis points on a good day, 25 bps on a bad day,” as one banker put it.
The pattern is consistent across the late spring wave. The wave accelerated in the final week of May as B/B2 rated borrowers such as Colosseum Dental hit the E+300 benchmark. In contrast to January, when borrowers could slice large chunks from their margins, there is now little room to push beyond that level. So far in this wave, Ivirma is the only B2 rated name to print at E+275, matching the January tight set by Nord Anglia.