While European direct lending funding booms, economists forecast macro-level gloom. In this climate, relationships are key to weathering downturns ahead, according to speakers at Debtwire’s European Mid Market Forum last week.

Direct lenders have become an equal alternative to bank lending in Europe, taking close to half of all deal flow in 2018.

Direct lending graduates to the main stage.

With banks fighting hard to keep hold of their turf, offering competitive leverage on deals, asset managers are increasingly looking to stretched senior financing as a way to compete in a level playing field. But with a rising number of players expected to offer the 5-6% stretched senior in 2017, the new debt solution risks doing to the unitranche what second lien did to mezzanine.

Emma Roche of Debtwire chaired a head-to-head debate between HSBC and Ares Management to level some of the views held by banks and direct lenders about each other. 

Listen to June's edition of the Middle Market Junction podcast.

Direct lenders’ promises to investors of high-yielding returns are becoming increasingly tougher to achieve.

With competition continuing to flood the mid-market lending space, banks and funds are forging new linkups to secure their place in the market and get one step ahead of their peers.