Iberian Private Credit Market: Spain & Portugal Outlook 2026

Essential Insights for Iberian Private Credit Investors

Table of Contents

• Understanding the Iberian Private Credit Landscape in 2023
• Spain vs Portugal: Key Differences in Private Lending Markets
• Major Players Shaping Iberian Credit Funds and Investments
• Which Sectors Are Driving Growth in Iberian Private Debt?
• Regulatory Framework Evolution Affecting Private Credit in Iberia
• Mid-Market Opportunities in Madrid and Lisbon Through 2026
• Alternative Finance Solutions Transforming the Peninsula
• Navigating Competitive Dynamics in Iberian Credit Markets

Understanding the Iberian Private Credit Landscape in 2023

The Iberian private credit market has undergone significant transformation in recent years, establishing itself as a compelling frontier within European alternative finance. As of 2023, the combined Spanish and Portuguese private credit market is valued at approximately €14.2 billion, representing nearly 8% of the European private debt ecosystem. This growth trajectory has been particularly pronounced since the 2008 financial crisis, which catalysed structural shifts in how businesses across the peninsula access capital.

Spain dominates the Iberian private credit landscape with roughly €11.7 billion in assets under management, while Portugal’s market has grown to €2.5 billion. This disparity reflects the relative economic scale of the two nations but masks Portugal’s impressive 18% compound annual growth rate in private lending since 2019—outpacing Spain’s 12% during the same period. The market’s expansion has been fuelled by banking sector retrenchment, with traditional lenders reducing exposure to mid-market companies and creating a financing gap that private credit providers have eagerly filled.

Notably, the Iberian private credit market exhibits distinct characteristics compared to more mature Northern European markets. Deal structures tend to be more bespoke, with greater emphasis on relationship-based lending and higher collateralisation requirements. Average yields in Iberian private debt typically command a 100-150 basis point premium over comparable transactions in France or Germany, reflecting both higher perceived risk and less competitive pressure among lenders in the region.

Spain vs Portugal: Key Differences in Private Lending Markets

While often grouped together under the Iberian umbrella, Spain and Portugal present markedly different private lending ecosystems with unique characteristics that investors must navigate. Spain’s private credit market demonstrates greater maturity, with a broader spectrum of financing solutions and deeper liquidity. The Spanish direct lending landscape features more established domestic players alongside international funds, creating a competitive environment that has begun to compress yields, particularly for larger transactions exceeding €100 million.

Portugal’s private credit market, while smaller, offers compelling opportunities with less competitive pressure. Portuguese businesses have historically relied more heavily on bank financing, with the transition to alternative funding sources occurring more recently than in Spain. This has created a market where private lenders can often secure more favourable terms, with average yields approximately 75-125 basis points higher than comparable Spanish transactions. However, this premium comes with additional challenges, including a smaller universe of potential borrowers and less standardised documentation.

Regulatory frameworks also diverge significantly. Spain has implemented more comprehensive regulations governing non-bank lending, providing greater clarity for market participants. Portugal’s regulatory environment for private credit remains somewhat less defined, though recent initiatives by the Comissão do Mercado de Valores Mobiliários (CMVM) signal movement toward greater standardisation. These regulatory distinctions directly impact fund structuring decisions, with many pan-Iberian lenders establishing separate vehicles for Portuguese investments to navigate compliance requirements effectively.

Deal sizes reflect economic scale disparities, with Spanish private credit transactions averaging €25-40 million compared to Portugal’s €10-20 million. This size differential influences documentation standards, covenant packages, and monitoring requirements across the two markets, requiring lenders to adapt their approach accordingly.

Major Players Shaping Iberian Credit Funds and Investments

The Iberian private credit market features a diverse ecosystem of players ranging from global alternative asset managers to specialised regional funds. At the upper end of the market, international heavyweights like Ares Management, Blackstone Credit, and ICG have established dedicated Iberian strategies, typically targeting larger transactions exceeding €50 million. These global players bring substantial capital resources and cross-border expertise but often focus primarily on Spain’s larger mid-market segment.

Regional specialists have carved out significant niches within the Iberian credit landscape. Spain-based Alantra Private Debt has emerged as a leading mid-market lender with approximately €800 million dedicated to Iberian opportunities. Similarly, Trea Direct Lending has built a compelling portfolio focused on smaller Spanish enterprises. In Portugal, Caixa Capital and Portugal Ventures have developed private credit capabilities alongside their equity offerings, while Iberis Capital has pioneered specialised lending solutions for Portuguese growth companies.

Banking institutions maintain relevance through hybrid models. Santander’s alternative credit division and CaixaBank’s structured finance unit have developed capabilities that blend traditional banking relationships with private credit flexibility. These institutions leverage their extensive regional networks to originate opportunities while structuring investments that mirror private credit terms.

The competitive landscape continues to evolve as European capital markets undergo structural shifts. Recent entrants including Pemberton Asset Management and Tikehau Capital have established Iberian beachheads, intensifying competition for high-quality assets. This evolving competitive dynamic has begun to influence terms, particularly in Spain’s upper mid-market, where covenant-lite structures have appeared in select transactions—a development previously rare in Iberian private credit.

Which Sectors Are Driving Growth in Iberian Private Debt?

The Iberian private debt landscape exhibits pronounced sector-specific growth patterns that reflect both regional economic strengths and structural transformations. Technology and digital services have emerged as the most dynamic segment, accounting for approximately 22% of Iberian private credit deployments in 2022-2023. This sector’s prominence stems from Spain’s vibrant technology ecosystem centred around Madrid and Barcelona, alongside Portugal’s rapidly expanding tech scene in Lisbon and Porto, where traditional bank financing often proves insufficient for asset-light business models.

Healthcare and life sciences represent another significant growth vector, comprising roughly 18% of recent private debt activity. Spain’s pharmaceutical manufacturing base and Portugal’s expanding medical technology sector have created substantial demand for flexible financing solutions. Private credit providers have responded with specialised offerings including royalty-based financing structures and growth capital facilities tailored to the sector’s unique cash flow characteristics.

Industrial manufacturing maintains its historical importance in the Iberian private debt market, particularly in Spain’s industrial heartlands of Catalonia and the Basque Country. This sector typically involves asset-backed lending opportunities with strong collateral positions, attracting lenders seeking more conservative risk profiles. Meanwhile, tourism and hospitality—traditional pillars of both Spanish and Portuguese economies—have seen renewed private credit interest following pandemic disruptions, with specialised debt solutions supporting recovery and transformation initiatives.

Renewable energy has emerged as perhaps the most compelling sectoral opportunity, with Spain’s ambitious solar and wind development pipeline creating substantial financing requirements. Portugal’s green energy transition similarly demands capital beyond what traditional lenders can provide. Private credit funds have developed specialised project finance capabilities to address this opportunity, with sustainability-linked structures becoming increasingly prevalent across the Iberian peninsula.

Regulatory Framework Evolution Affecting Private Credit in Iberia

The regulatory landscape governing Iberian private credit continues to evolve, with significant implications for market participants. Spain’s regulatory framework has matured considerably since the introduction of the Ley 5/2015, which established clear parameters for direct lending activities by alternative investment funds. Recent amendments have further clarified licensing requirements and operational constraints, creating a more predictable environment that has encouraged market expansion. The Comisión Nacional del Mercado de Valores (CNMV) has adopted a generally supportive stance toward private credit, recognising its role in diversifying financing sources for Spanish enterprises.

Portugal’s regulatory approach remains somewhat less defined, though significant progress has occurred. The CMVM has issued guidance clarifying that certain private credit activities fall within existing alternative investment fund frameworks, while banking regulations have been modified to acknowledge non-bank lending channels. However, Portuguese regulations still present greater ambiguity regarding permissible structures and activities, particularly for foreign lenders without established Portuguese entities.

Tax considerations significantly influence fund structuring decisions across the peninsula. Spain’s tax treatment of interest income for non-resident lenders has undergone several modifications, with current regulations offering viable pathways for efficient structuring through specific European jurisdictions. Portugal’s tax framework presents different challenges, particularly regarding withholding obligations and the classification of certain fee income. These nuances often necessitate complex fund architectures for pan-Iberian strategies.

Looking forward to 2026, regulatory convergence appears likely as both nations align with broader European initiatives. The European Commission’s Capital Markets Union agenda will likely drive greater harmonisation of private credit regulations across the peninsula, potentially reducing current disparities. Market participants anticipate that upcoming regulatory developments will focus on transparency requirements and investor protection measures rather than imposing significant new operational constraints.

Mid-Market Opportunities in Madrid and Lisbon Through 2026

The mid-market segment represents the most fertile ground for Iberian private credit through 2026, with Madrid and Lisbon emerging as particularly compelling opportunity centres. In Madrid, companies with annual revenues between €25-150 million face a pronounced financing gap as traditional banks increasingly focus on larger enterprises or standardised SME products. This segment—comprising approximately 3,800 companies—represents a €5.2 billion annual financing opportunity that private credit providers are actively targeting. Key Madrid-based sectors driving demand include technology services, specialised manufacturing, and healthcare services.

Lisbon’s mid-market presents different characteristics but equally attractive prospects. The Portuguese capital hosts roughly 1,200 mid-market enterprises (€10-75 million revenue) seeking approximately €1.8 billion in annual financing. These companies typically demonstrate stronger growth profiles than their Madrid counterparts but face more significant banking constraints. Lisbon’s technology ecosystem has emerged as a particularly dynamic segment, with companies requiring growth capital that traditional lenders struggle to provide without substantial collateral.

Across both markets, succession planning and generational transitions create compelling opportunities. Family-owned businesses represent approximately 65% of Spain’s mid-market and 72% of Portugal’s, with many facing ownership transitions that require sophisticated financing solutions. Private credit providers have developed specialised offerings addressing these scenarios, including minority equity components alongside traditional debt structures.

Transaction types reflect market-specific dynamics. In Madrid, acquisition financing dominates, representing approximately 45% of mid-market private credit activity. Lisbon’s market features greater emphasis on growth capital (38%) and refinancing transactions (32%). These distinctions reflect Portugal’s earlier stage in the private credit adoption cycle compared to Spain’s more mature market. Through 2026, analysts project continued expansion in both markets, with Madrid’s mid-market private credit volume growing at 9-11% annually and Lisbon’s at 14-16%.

Alternative Finance Solutions Transforming the Peninsula

Beyond traditional direct lending, innovative alternative finance solutions are reshaping the Iberian financial landscape. Asset-based lending has gained significant traction, particularly in Spain where specialised providers have developed sophisticated offerings secured against accounts receivable, inventory, and equipment. This segment has grown at approximately 17% annually since 2020, with total market volume reaching €3.8 billion. Portuguese asset-based finance remains less developed but is expanding rapidly from a smaller base.

Supply chain finance represents another high-growth segment across the peninsula. Spain’s fragmented industrial supply chains create natural opportunities for financing solutions that bridge payment terms between large corporates and their smaller suppliers. Several fintech platforms have emerged to address this market, often partnering with private credit funds to access deployment capacity. Portugal’s more concentrated industrial structure presents different dynamics but similar opportunities, particularly in automotive, textile, and food processing sectors.

Venture debt has established a meaningful presence in both Madrid and Barcelona, with more recent expansion into Lisbon’s burgeoning startup ecosystem. Specialised providers including Kreos Capital and Claret Capital have completed significant transactions supporting Iberian technology companies, while local players such as Inveready have developed tailored offerings for earlier-stage enterprises. This segment addresses a critical financing gap for asset-light growth companies that traditional lenders typically avoid.

Real estate debt funds have proliferated across the peninsula, focusing primarily on development financing and value-add strategies that mainstream banks increasingly avoid. This segment has attracted substantial institutional capital, with several dedicated Iberian real estate debt funds raising over €500 million each. While Madrid and Barcelona represent the largest markets, Lisbon and Porto have seen accelerating activity as Portugal’s property market continues its post-pandemic recovery. These specialised financing solutions collectively represent the frontier of Iberian alternative finance, expanding the toolkit available to peninsula enterprises beyond conventional lending models.

Navigating Competitive Dynamics in Iberian Credit Markets

The competitive landscape for Iberian private credit exhibits increasing sophistication and segmentation as the market matures. At the upper end of the market (€75+ million transactions), competition has intensified significantly, with global alternative asset managers competing directly against traditional banks for high-quality Spanish credits. This segment has experienced yield compression of approximately 150-200 basis points since 2019, with unitranche facilities for strong credits now frequently priced below 600 basis points over reference rates. Portugal’s larger transaction market remains less competitive, though international players are increasingly active.

The core mid-market (€20-75 million) presents more balanced competitive dynamics. Specialised Iberian lenders maintain significant advantages in origination and local relationships, while international funds offer competitive pricing and greater deployment capacity. This segment has experienced more modest yield compression (75-125 basis points) and maintains attractive risk-adjusted returns compared to other European markets. Lenders have responded to competitive pressures by developing sector specialisations and value-added capabilities beyond pure financing.

The lower mid-market (sub-€20 million) remains relatively underserved, particularly in Portugal and Spain’s secondary cities. This segment offers limited competition and premium pricing but presents challenges regarding deal flow consistency and monitoring requirements. Several specialised funds have developed efficient models addressing these smaller transactions, typically leveraging technology platforms to manage higher transaction volumes with lower average sizes.

Looking toward 2026, competitive dynamics will likely evolve along several dimensions. Geographic expansion beyond Madrid, Barcelona and Lisbon represents one frontier, with Valencia, Bilbao, and Porto emerging as secondary hubs with less competitive pressure. Sector specialisation will intensify as generalist strategies face margin pressure in competitive segments. Additionally, product innovation—particularly hybrid debt-equity structures and sustainability-linked instruments—will provide differentiation opportunities as the market continues its maturation process. For investors and lenders navigating this evolving landscape, strategic positioning and specialisation will prove increasingly critical to maintaining attractive returns in Iberian private credit.

Frequently Asked Questions

What is the current size of the Iberian private credit market?

As of 2023, the combined Spanish and Portuguese private credit market is valued at approximately €14.2 billion, representing nearly 8% of the European private debt ecosystem. Spain dominates with roughly €11.7 billion in assets under management, while Portugal’s market has grown to €2.5 billion.

How do private credit markets differ between Spain and Portugal?

Spain’s private credit market is more mature with broader financing solutions and deeper liquidity, while Portugal’s smaller market offers less competitive pressure with higher yields (75-125 basis points premium over Spanish transactions). Spain has more comprehensive regulations for non-bank lending, while Portugal’s regulatory environment remains less defined. Average deal sizes also differ significantly: €25-40 million in Spain versus €10-20 million in Portugal.

Which sectors are driving growth in Iberian private debt?

The top growth sectors in Iberian private debt include: technology and digital services (22% of deployments), healthcare and life sciences (18%), industrial manufacturing (particularly in Spain’s industrial regions), tourism and hospitality (post-pandemic recovery), and renewable energy (with substantial financing requirements for Spain and Portugal’s green energy transitions).

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

The market includes global alternative asset managers (Ares Management, Blackstone Credit, ICG), regional specialists (Alantra Private Debt, Trea Direct Lending in Spain; Caixa Capital, Portugal Ventures in Portugal), banking institutions with hybrid models (Santander, CaixaBank), and newer entrants like Pemberton Asset Management and Tikehau Capital establishing Iberian operations.

What are the mid-market opportunities in Madrid and Lisbon through 2026?

Madrid’s mid-market (companies with €25-150 million revenue) represents a €5.2 billion annual financing opportunity across approximately 3,800 companies, growing at 9-11% annually. Lisbon hosts roughly 1,200 mid-market enterprises (€10-75 million revenue) seeking approximately €1.8 billion in annual financing, with projected growth of 14-16% annually. Madrid’s market is dominated by acquisition financing (45%), while Lisbon focuses more on growth capital (38%) and refinancing (32%).

What alternative finance solutions are emerging in the Iberian peninsula?

Key alternative finance solutions include asset-based lending (growing at 17% annually since 2020, reaching €3.8 billion in Spain), supply chain finance (addressing fragmented industrial supply chains), venture debt (established in Madrid and Barcelona, expanding to Lisbon), and real estate debt funds (focusing on development financing and value-add strategies that traditional banks increasingly avoid).

How are competitive dynamics evolving in Iberian credit markets?

The upper market segment (€75+ million transactions) has experienced significant yield compression (150-200 basis points since 2019) due to competition between global asset managers and traditional banks. The core mid-market (€20-75 million) maintains more balanced dynamics with modest yield compression (75-125 basis points). The lower mid-market (sub-€20 million) remains underserved with premium pricing but operational challenges. Future competitive evolution will likely involve geographic expansion beyond major cities, increased sector specialization, and product innovation.