J.P. Morgan Hosts the 10th European Leveraged Finance Conference
J.P. Morgan held the 10th "European Leveraged Finance Conference" in London in September, which has been held for ten consecutive years, gathering institutional investors and issuer representatives from the global high-yield bond and leveraged loan markets.
According to previous disclosures by J.P. Morgan, the 9th conference held last September attracted over 1,800 attendees and representatives from 90 issuing companies, making it one of the largest institutional gatherings in the European leveraged finance industry.
As disclosed at the 9th conference, by the end of August last year, the annual issuance of European leveraged loans reached $177 billion, with an expected total of $225 billion for the year; the annual supply forecast for high-yield bonds was raised from €87 billion to €125 billion, with the high-yield bond spread narrowing by about 30 basis points to approximately 300 basis points, and the overall yield slightly above 5% for the year.
At the same conference, it was reported that the European high-yield bond default rate was about 3.5% at the time, expected to rise to 5.5% by year-end, but anticipated to fall back to 2.25% by 2026; the global private credit "dry powder" stood at about $450 billion, with approximately 145 CLO (collateralized loan obligation) warehouses under construction in Europe at that time, and 28 new CLO warehouses registered in July, the highest monthly total since 2021; European high-yield funds had seen about €8 billion in net inflows since late April of that year.
Conference attendees assessed that new leveraged buyout (LBO) underwriting transactions had reached about half a dozen during that summer, the highest activity level since 2021, but it was generally believed that a significant increase in M&A activity was "more likely in 2026 than in 2025"; the conference also identified leisure/theme parks, chemicals, oil and gas, and certain European healthcare issuers as relatively concentrated risk sectors, while infrastructure, satellites, defense, and equipment leasing were viewed as relatively opportunity-rich areas.
From an industry mechanism perspective, the European Leveraged Finance Conference, as J.P. Morgan's annual flagship event, serves the dual function of "creating momentum for high-yield bond and leveraged loan primary market issuance"—issuing companies use this platform to roadshow to institutional investors, while private credit and CLO managers showcase their funding strength and product supply capabilities; last year's data showed that funds continued to flow from traditional bank loan channels to private credit and CLO structured products, while low-rated (CCC-rated) issuers significantly underperformed high-rated (BB-rated) issuers, reflecting that even in a generally easing environment with narrowing spreads, institutional funds are consciously concentrating on quality assets and remaining cautious towards low-quality issuers.
Source: Public Information (Note: Market data from the third to sixth paragraphs are sourced from J.P. Morgan's disclosures at the 9th conference in September 2025, used to reflect industry background, not data from this conference)
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The European Leveraged Finance Conference hosted by J.P. Morgan has been held for ten consecutive years, serving as a dual function of "information hub + primary market roadshow window"—similar events include the European Leveraged Finance Conference hosted by Deutsche Bank and J.P. Morgan's own Global Leveraged Finance Conference held in North America (which faced general unease among attendees regarding the $3 trillion leveraged finance market due to geopolitical tensions earlier this March); by continuously hosting the same branded event for a decade, investment banks are effectively building long-term client relationships and market influence for their leveraged finance underwriting business.
From the data disclosed at the previous conference, the flow of funds shows a clear structural characteristic—private credit "dry powder" reached $450 billion, coupled with a record number of CLO warehouse registrations, indicating that capital is continuously shifting from traditional bank balance sheet loans to private credit funds and CLO structured products, which are off-balance sheet and involve higher leverage; at the same time, funds within bonds also exhibit a "quality over quantity" stratification, with high-rated issuers attracting capital while low-rated issuers are marginalized, clearly directing capital towards "avoiding tail risks and concentrating on top assets."
This bears structural similarities to the accumulation patterns of leveraged loans and CDO markets before the 2007 subprime crisis—at that time, private funds and structured products were also rapidly expanding, with investors forced to seek yield in lower-quality assets in a low-interest-rate environment; however, the current stage of the industry is closer to a "healthy expansion phase with spreads narrowing to historical lows, institutional funds maintaining discipline, and vigilance towards low-quality issuers," rather than an indiscriminate leverage accumulation bubble, which is reflected in the ongoing divergence in returns between "BB" and "CCC" rated bonds.
Essentially, this represents "capital concentration"—from a mechanism perspective, the continuous expansion of private credit and CLO channels is gradually shifting the leveraged finance business, which originally relied heavily on bank balance sheets, to non-bank institutions that are less regulated and have greater maturity mismatch; large investment banks like J.P. Morgan position themselves as information hubs and transaction facilitators in this capital reallocation process, allowing them to continue generating revenue through underwriting, matchmaking, and data insights, even as their share of bank balance sheet leveraged loan business is diverted to private credit.
ABAB News · Cognitive Law
Holding the same conference for ten years is not about the conference itself, but about influence.
When spreads narrow, discipline is worth more than yield.
Capital does not disappear; it merely moves from banks' balance sheets to others' off-balance sheets.