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The KPMG Debt Market Snapshot Edition Q3 2021 is here. With the aim of keeping you up to date on the latest developments and trends in Europe's financing markets, our Debt Advisory experts use current market data to discuss prominent market drivers and provide first-hand insights from daily practice. Read more in our most recent edition.

As vaccination rates have been steadily increasing and allowing social and economic life to gradually return to normal, Europe's economic activity is recovering. At the same time, rising energy prices and freight costs, as well as supply bottlenecks, are disrupting global supply chains resulting in an increase in raw material prices and inflation. Following the quieter summer months, the European debt markets saw higher activity in September. This shows that, despite inflation expectations, the market was not expecting a tightening in financing conditions and consequently did not find significant debt frontloading necessary. In Q3 2021, financing conditions remained highly favourable for borrowers. However, given the current rise in inflation, market participants will most likely face higher interest rates over the upcoming quarters.


  • In Q3 2021, the leveraged loan market did not manage to keep up the strong performance we saw over the first half of 2021 and decreased quarter-on-quarter by approximately 40% in terms of volume. The sponsored loan market on the other side maintained its solid performance, driven by a high activity in the M&A segment. Still, the full-year 2021 volumes in both markets are on track to cap off a record year.
  • The Schuldschein market rebounded in Q3 2021 after a weak first half of the year, though, in a year-on-year comparison, 2021 was characterised by lower activity. This is partially attributable to the abandonment of the Schuldschein by rated issuers as they could achieve cost advantages on the bond market.
  • The expansive monetary and fiscal policies caused the spread between corporate and government bonds to narrow further as e.g. the spread for A-rated bonds decreased to an average of 53 bps at the end of Q3 2021.
  • While the ECB continues to assess the current inflation development as temporary, market participants, however, are increasingly taking into account the possibility of higher interest rates and are starting to inflation-proof their portfolios.