Cross-border direct lending deals are on the rise, with 90% of private credit professionals across Europe reporting an increase, according to research from Nordic Trustee, part of global capital markets services provider Ocorian.

The study, which surveyed private credit and debt fund managers, investors and advisors, highlighted growing optimism in the sector despite recent market volatility. Professionals expect 9.9% growth in private credit this year—down from the 11% forecast earlier, but still marking expansion.

Technology is tipped as the fastest-growing sector for direct lending in Europe, ahead of real estate, energy and renewables. The UK and Ireland are expected to see the highest volume of new loans over the next 12 months, followed by the Germany, Austria and Switzerland region, Belgium, Netherlands, Luxembourg and the Nordics.

Top drivers of direct lending growth include rising demand for capital, declining interest rates and reduced appetite from traditional banks. The trend of private equity firms turning to private credit for M&A and LBO funding is also expected to accelerate, with 83% of professionals predicting more deals will bypass public markets.

Cato Holmsen, CEO at Nordic Trustee, said: “Cross-border direct lending deals are becoming increasingly important in Europe and that is highlighted by our study, which forecasts strong growth this year compared with last year. While tariff wars have ratcheted up and de-escalated, stock and bond markets have corrected and rebounded, and forecasts for economic growth have changed with dizzying speed, the private credit market has stoically looked beyond all this turmoil.

The key drivers of direct lending growth over the next three to five years are expected to be rising demand for private capital and falling interest rates as well as traditional banks not competing or wanting to compete. Growing use by private equity of private credit to fund M&A and buyouts is also making a major contribution highlighting the need for expertise and experience in the market.”