US leveraged loan issuance is energizing the global debt capital markets, with record volumes of issuance in Q3 2025 positioning the market for a strong finish to the year.

In Q3 2025, issuance for US leveraged loans totaled US$544.9 billion—the highest quarterly issuance on Debtwire record and up 35.1% quarter-on-quarter. US activity levels are also up on a year-on-year basis, rising by 12% from US$1.31 trillion during the first nine months of 2024 to US$1.46 trillion during the corresponding period in 2025.

European leveraged loan issuance has also posted encouraging year-on-year gains, with issuance for the first nine months of 2025 totaling US$298.9 billion, up 14.3% on the US$261.6 billion of issuance recorded over the same period in 2024.

APAC (excl. Japan) loan markets have been flatter, with renewed interest in leveraged loan issuance for China acquisitions. The total value of leveraged and non-leveraged loan issuance during the first three quarters of 2025 reached US$229.2 billion, down marginally on the US$232.1 billion recorded during the first nine months of 2024.

New money boost lifts US market

The US market has benefited from the long-anticipated uptick in new money issuance. According to Debtwire, new money issuance in the US climbed by 45.63% year-on-year for the nine months ending in September.

Refinancing remained a key driver of issuance—US$639.4 billion worth of refinancing accounted for more than 40% of US leveraged loan activity from Q1 to Q3 2025—but the reopening of other channels has boosted overall volume.

M&A has been one of the key contributors to the jump in issuance. US M&A deal value surpassed US$1.6 trillion during the first three quarters of 2025, already ahead of the full-year totals logged in 2023 and 2024. Increased levels of M&A activity are deepening the pipeline of financing opportunities for leveraged loan markets.

Megadeals like the US$55 billion take-private of Electronic Arts (EA) are generating welcome leveraged buyout deal flow for lenders. More than 20 banks are lining up to raise US$20 billion of debt for the EA deal, with the financing set to launch in early 2026.

Attractive pricing for borrowers has also spurred new money activity, encouraging them to raise capital and take advantage of the low financing costs available. According to Debtwire, the average institutional loan margin in Q3 was 3.13%, the lowest quarterly average on record.

A more stable secondary market has likewise propped up new money issuance. Average bids for loans came in at 95 cents on the dollar (an improvement on the 93 cents in April), with the average share of loans trading at or above par holding steady at 40% through Q3.

European market relies on refinancing

In Europe, new money activity has not matched the momentum observed in the US, with activity still heavily dependent on refinancing. Debtwire numbers show refinancing accounting for 87% of total institutional issuance from Q1 to Q3 2025, a record high.

Despite the lack of new money deals compared to the US, the European market is also benefiting from lower margins and stable pricing in the secondary market.

As the year draws to a close, average margins on first lien institutional loans are coming in at 3.71%, according to Debtwire. These margins are low by recent standards—the average margin in Q1 2023 was 4.91%, with the mean margin since then standing at 4.2%—and offer borrowers an opportunity to raise capital at attractive rates. Meanwhile, in the secondary market, discounts to par widened marginally in Q3 2025, but recovered by the end of September, when bids for institutional loans averaged 97 cents on the dollar.

M&A-related financing in Europe may be lagging the US, but the continent’s M&A market is showing signs of recovery. Total M&A deal value in Q3 2025 reached US$247.7 billion, the strongest quarter for aggregate value since 2022.

Improving M&A deal figures are translating into new deal financing opportunities. According to Bloomberg, the pipeline includes a US$1.2 billion debt package to finance the buyout of London-based financial software company Finastra’s treasury unit and a €4 billion debt deal to support Carlyle’s acquisition of a stake in the coatings division of German chemicals company BASF.

APAC holds steady

Issuance has held steady in APAC (excl. Japan), with the loan market proving resilient in the face of global tariff uncertainty.

A trade truce struck by the US and China at the end of October will help to mitigate tariff risk and give borrowers more clarity on their financing requirements, encouraging future loan issuance in China and across the region. There have been several notable international sponsor leveraged financings in China after several years of inactivity, including KKR’s acquisition of Dayao Beverages and FountainVest’s acquisition of SML.

As has been the case in the US and Europe, forecasters also expect more M&A lending opportunities to emerge in APAC in the near term. Political uncertainty in the US has seen investors and dealmakers pay closer attention to opportunities in other jurisdictions, boosting APAC M&A. According to Mergermarket, the value of inbound dealmaking to Asia reached US$147.3 billion from Q1 to Q3 2025, easily eclipsing the full-year total recorded in 2024 (US$123.9 billion).

APAC (excl. Japan) borrowers are also benefiting from the expansion and rapid growth of the Asian private debt community. Research by global alternative investment manager industry body AIMA forecasts that Asian private credit assets under management will grow by 46% from US$59 billion in 2024 to US$92 billion by 2027.

The Asian private debt market remains fragmented, comprised of more than 50 distinct markets, each with its own economic environment, and legal and regulatory frameworks. The industry is also predominantly focused on mid-market loans, with 90% of private debt lending involving borrowers that are not backed by private equity sponsors. But the market is maturing rapidly, swiftly developing into a consistent feature of investor private credit portfolios.

Global leveraged loan markets have entered the final quarter of 2025 on a high note, driven by record issuance in the US, while signs of recovery in international M&A markets bode well for issuance across all regions. The stage seems set for a robust end to the year and a strong start to 2026.