Iberian Private Credit Market: Spain & Portugal Outlook 2026

Essential Insights: The Iberian Private Credit Evolution

Table of Contents

• The Evolution of Private Credit in Spain and Portugal
• Understanding the Size and Scope of Iberian Credit Funds
• Key Sectors Driving Private Lending Growth in Iberia
• How Do Spanish and Portuguese Private Credit Markets Differ?
• Regulatory Framework Shaping Iberian Alternative Finance
• Major Players in the Madrid and Lisbon Private Credit Scene
• Future Trends: Iberian Mid-Market Lending Through 2026

The Evolution of Private Credit in Spain and Portugal

The Iberian private credit landscape has undergone remarkable transformation over the past decade, emerging from the shadows of traditional banking to become a vital component of the regional financial ecosystem. Following the 2008 financial crisis and subsequent European sovereign debt crisis, both Spain and Portugal experienced significant banking sector contractions, creating a financing gap that alternative lenders quickly moved to fill.

In Spain, the journey began around 2013-2014 when international funds first established dedicated Spanish private debt strategies. The market gained momentum as domestic banks, constrained by regulatory pressures and non-performing loan challenges, retreated from certain lending segments. Portuguese private credit development followed a similar trajectory but at a slightly delayed pace, gaining significant traction from 2016 onwards as the country emerged from its economic adjustment programme.

Today, Spanish private lending has evolved into a sophisticated market with diverse strategies spanning direct lending, special situations, and distressed debt. Portugal’s alternative finance sector, while smaller, has shown impressive growth rates, particularly in supporting the country’s burgeoning tech and tourism sectors. Both markets have benefited from increased institutional investor appetite for yield in a prolonged low-interest rate environment, though recent rate hikes have introduced new dynamics to the Iberian credit funds landscape.

Understanding the Size and Scope of Iberian Credit Funds

The Iberian private credit market has experienced substantial growth, with current estimates placing its total value at approximately €15-18 billion as of 2023. Spain dominates this landscape, accounting for roughly 80% of the market, while Portugal represents the remaining 20%. This disparity reflects the relative economic sizes of the two countries but also indicates Portugal’s significant growth potential in the alternative finance space.

Spanish private debt has matured considerably, with dedicated funds now deploying capital across various transaction sizes. The mid-market segment (€10-50 million ticket sizes) remains the most active, though larger transactions exceeding €100 million are increasingly common as international players compete for quality assets. Portuguese credit market activity concentrates more heavily in the lower mid-market range (€5-25 million), reflecting the smaller average enterprise size in the country.

In terms of strategy distribution, direct lending dominates the Iberian private credit landscape, representing approximately 65% of deployed capital. Special situations and distressed debt strategies account for roughly 20%, while asset-based lending and specialised financing solutions comprise the remaining 15%. This distribution highlights the market’s primary function in providing growth and acquisition financing to businesses underserved by traditional banking channels, a trend particularly evident in European capital markets where alternative financing continues to gain prominence.

Key Sectors Driving Private Lending Growth in Iberia

The Iberian private credit market exhibits distinct sectoral preferences that reflect both regional economic strengths and areas where traditional bank financing remains constrained. In Spain, several industries have emerged as particularly active recipients of private lending solutions. The technology sector leads the charge, with software, fintech, and digital services companies frequently turning to credit funds for growth capital. Healthcare and pharmaceuticals represent another significant vertical, with private credit supporting both organic expansion and consolidation plays in fragmented subsectors.

Real estate and infrastructure continue to attract substantial private debt capital across the Iberian peninsula. In Spain, residential development financing and logistics assets have been particularly active segments, while Portugal has seen significant alternative finance flows into hospitality and tourism-related infrastructure. The renewable energy sector stands out in both markets, with private credit funds actively financing solar, wind, and increasingly, energy storage projects across Iberia.

Manufacturing and industrial businesses represent another key vertical for Iberian SME financing, particularly for companies undergoing technological transformation or international expansion. In Portugal, export-oriented manufacturers have increasingly accessed private credit to fund capacity expansion and working capital needs. Consumer-facing businesses, including retail and food & beverage, have also attracted significant private lending activity, especially for companies with strong digital transformation strategies or consolidation opportunities.

How Do Spanish and Portuguese Private Credit Markets Differ?

While sharing geographical proximity and certain economic characteristics, Spanish and Portuguese private credit markets exhibit notable differences in maturity, structure, and operational dynamics. The Spanish market benefits from greater scale and depth, with a more diverse ecosystem of both international and domestic credit fund managers. This has fostered greater competition, leading to more borrower-friendly terms and innovative financing structures. Portuguese private debt, while growing rapidly, remains more concentrated among fewer players, though this is gradually changing as international funds increase their Lisbon presence.

Pricing dynamics also differ between the two markets. Spanish direct lending typically commands spreads 50-100 basis points lower than comparable Portuguese transactions, reflecting the former’s greater market maturity and competition. Documentation standards in Spain have largely converged with wider European norms, while Portuguese transactions often retain more country-specific elements, though this gap is narrowing as cross-border activity increases.

Another key distinction lies in the relationship with traditional banking. In Spain, private credit frequently operates alongside bank financing in complementary structures, with banks providing senior facilities while alternative lenders supply mezzanine or unitranche solutions. The Portuguese market has historically seen more separation between bank and non-bank financing, though recent years have witnessed growing collaboration between these funding sources. Default rates and recovery experiences also differ, with Portuguese restructuring processes typically taking longer to resolve than their Spanish counterparts, influencing how distressed debt investors approach opportunities in each market.

Regulatory Framework Shaping Iberian Alternative Finance

The regulatory environment governing Iberian private credit has evolved significantly, creating both opportunities and challenges for market participants. In Spain, the regulatory framework has gradually become more accommodating to non-bank lenders, with reforms to the Spanish Capital Companies Act facilitating direct lending by alternative investment funds. The Spanish Securities Market Commission (CNMV) has established clearer guidelines for private debt funds, providing greater operational certainty while maintaining appropriate investor protections.

Portugal’s regulatory approach to credit regulations has similarly evolved, with the Portuguese Securities Market Commission (CMVM) implementing frameworks that balance market development with systemic risk considerations. Recent reforms have simplified the establishment and operation of private credit vehicles, contributing to market growth. Both countries have aligned their approaches with broader European initiatives, including the EU’s Capital Markets Union agenda, which aims to diversify financing sources for European businesses.

Tax considerations remain important in shaping the Iberian private credit landscape. Spain offers certain tax advantages for qualifying loan origination vehicles, while Portugal has implemented incentives to attract international fund managers to establish operations in the country. Bankruptcy and restructuring frameworks in both countries have undergone modernisation, with Spain’s insolvency regime now more closely aligned with international standards following recent reforms. Portuguese debt restructuring processes, while improving, still present greater complexity and longer timelines, influencing how private credit providers structure transactions and security packages in the country.

Major Players in the Madrid and Lisbon Private Credit Scene

The Iberian private credit market features a diverse mix of international and domestic players, with Madrid hosting the largest concentration of credit fund managers active in the region. Global alternative asset managers with dedicated Iberian private debt strategies include Arcano Capital, Ares Management, Blackstone Credit, and ICG, all maintaining significant presences in Madrid. These firms typically focus on larger transactions, often exceeding €50 million in size, and frequently compete for sponsorbacked deals alongside traditional leveraged finance providers.

The mid-market segment features both international and domestic Spanish credit fund managers, including Alantra Private Debt, Oquendo Capital, Trea Direct Lending, and Muzinich & Co. These firms have established strong positions in the €10-50 million transaction range, often maintaining close relationships with regional sponsors and family offices. The lower mid-market and SME financing space includes specialised players like October, Inveready, and Alteralia, who have developed efficient processes for deploying smaller ticket sizes across the Iberian peninsula.

In Portugal, the private credit landscape features fewer dedicated managers but is rapidly evolving. International players typically cover Portugal from Madrid offices, though firms like Arrow Global (through its Norfin platform) and ECS Capital maintain significant Lisbon operations focused on Portuguese lending platforms and opportunities. Domestic Portuguese institutions have also entered the space, with Caixa Geral de Depósitos and Banco Português de Investimento developing private debt capabilities alongside their traditional banking activities. The competitive landscape continues to evolve as new entrants recognise the growth potential in Iberian private credit, particularly as traditional banks face ongoing regulatory pressures limiting certain types of lending activity.

Future Trends: Iberian Mid-Market Lending Through 2026

The outlook for Iberian private credit through 2026 points toward continued expansion, albeit with evolving market dynamics. Growth projections suggest the overall market could reach €25-30 billion by 2026, representing approximately 60-70% growth from current levels. This expansion will likely be driven by several key trends shaping the future of Spanish and Portuguese private debt markets.

Sector specialisation is expected to accelerate, with dedicated credit strategies emerging for high-growth verticals including technology, healthcare, and renewable energy. These specialised funds will leverage deep industry expertise to better assess risks and opportunities, potentially commanding premium returns through value-added financing solutions. Geographic specialisation within Iberia will also evolve, with more funds developing dedicated Portuguese strategies rather than covering the country as an extension of Spanish operations.

The competitive landscape will continue to mature, with increased segmentation between upper mid-market, core mid-market, and lower mid-market strategies. This specialisation will likely compress spreads in the most competitive segments while creating opportunities in underserved niches. Technology adoption will accelerate across the Iberian private credit ecosystem, with advanced data analytics and AI-driven underwriting tools becoming competitive differentiators for forward-thinking credit fund managers.

ESG considerations will increasingly influence Iberian private credit investment opportunities, with sustainability-linked loans and green financing solutions gaining prominence. This trend aligns with broader European regulatory direction and institutional investor preferences. Finally, we anticipate greater convergence between Spanish and Portuguese market practices, creating a more unified Iberian private credit market that can more effectively compete with Northern European alternatives while maintaining its distinctive regional characteristics and competitive advantages.

Frequently Asked Questions

What is private credit and why is it growing in Spain and Portugal?

Private credit refers to debt financing provided by non-bank lenders to businesses. It’s growing in Spain and Portugal because traditional banks retreated from certain lending segments following the 2008 financial crisis and European sovereign debt crisis, creating a financing gap. This alternative lending market has expanded due to institutional investor demand for yield, regulatory pressures on traditional banks, and businesses seeking more flexible financing solutions.

How large is the Iberian private credit market?

The Iberian private credit market is valued at approximately €15-18 billion as of 2023. Spain dominates with roughly 80% of the market (€12-14.4 billion), while Portugal represents the remaining 20% (€3-3.6 billion). Growth projections suggest the overall market could reach €25-30 billion by 2026, representing approximately 60-70% growth from current levels.

Which sectors attract the most private credit funding in Iberia?

The top sectors attracting private credit in Iberia include: technology (software, fintech, digital services); healthcare and pharmaceuticals; real estate and infrastructure (especially logistics and hospitality); renewable energy (solar, wind, energy storage); manufacturing and industrial businesses (particularly export-oriented companies); and consumer-facing businesses undergoing digital transformation or consolidation.

What are the key differences between Spanish and Portuguese private credit markets?

Key differences include: market maturity (Spain’s market is more developed with diverse players); transaction size (Spain focuses on €10-50 million mid-market deals while Portugal concentrates on €5-25 million lower mid-market range); pricing (Spanish deals typically command 50-100 basis points lower spreads); banking relationships (Spain sees more collaboration between banks and alternative lenders); and restructuring processes (Portuguese processes typically take longer than Spanish ones).

Who are the major players in the Iberian private credit market?

Major international players include Arcano Capital, Ares Management, Blackstone Credit, and ICG. Mid-market specialists include Alantra Private Debt, Oquendo Capital, Trea Direct Lending, and Muzinich & Co. The lower mid-market features October, Inveready, and Alteralia. In Portugal, key players include Arrow Global (through Norfin), ECS Capital, and banking institutions like Caixa Geral de Depósitos and Banco Português de Investimento that have developed private debt capabilities.

How is regulation affecting private credit in Spain and Portugal?

Regulations have become more accommodating to non-bank lenders in both countries. Spain reformed its Capital Companies Act to facilitate direct lending by alternative investment funds, while Portugal simplified the establishment of private credit vehicles. Both countries have aligned with EU’s Capital Markets Union agenda and implemented tax incentives for qualifying loan origination vehicles. Bankruptcy frameworks have also been modernized, with Spain’s insolvency regime now more closely aligned with international standards.

What future trends will shape Iberian private credit through 2026?

Key future trends include: increased sector specialization (particularly in technology, healthcare, and renewable energy); geographic specialization with more dedicated Portuguese strategies; market segmentation between different mid-market tiers; accelerated technology adoption in underwriting; greater emphasis on ESG considerations with sustainability-linked loans; and convergence between Spanish and Portuguese market practices creating a more unified Iberian private credit market.