Senior surges

A shift towards senior debt could indicate that the credit cycle is turning.

Senior debt strategies are eating up market share from some of the riskier funds in Europe.

A look at the proportion of funds raised across the main strategies in Europe shows senior debt, which has conventionally been a leading strategy on the continent, now accounts for over 70 percent of funds raised. This is well above the 50.9 percent high seen in 2015.

The shift towards senior could reflect growing fears that the European (and global) economy is entering a late-cycle period and investors are consequently looking towards lower yielding strategies with enhanced downside protection to take a more defensive stance.

However, it is worth noting the quantity of funds raised in 2017 so far is already well ahead of any previous year, so despite much lower market share, other strategies like mezzanine and distressed debt are still raising significant amounts of capital.