FRANCE Law and Practice Contributed by: Fernand Arsanios, Delphine Guillotte, Guillaume Chaboureau, Houda Idaroussi and El Sayegh, King & Spalding
King & Spalding 48 bis rue de Monceau 75008 Paris France Tel: +33 1 7300 3900 Email: lbensaid@kslaw.com Web: www.kslaw.com
1. Loan Market Overview 1.1 The Regulatory Environment and Economic Background
the direction, terms and trends of the loan market in France. Loans are increasingly directed toward sectors considered strategic or resilient. Loan docu- mentation has become more stringent and pricing has generally increased, although some instances of more favourable pricing have been observed in 2025 (in comparison to 2024). Political uncertainty has contributed to a more measured approach to large syndicated transactions, with borrowers increasingly opting for bilateral or club deals due to their speed and confidentiality. 1.3 The High-Yield Market The high-yield market has played a strategic and increasingly influential role in shaping emerging financing trends, both in France and across Europe, and has become a key source of capital for French companies, particularly as bank lending declines. The start of 2025 has seen heightened activity in the high- yield market, driven largely by a wave of refinancing and repricing transactions. The high-yield market has shaped TLB (Term Loan B) US-style documentation by introducing New York law- style covenants layered into the usual facility agree- ments. 1.4 Alternative Credit Providers Alternative credit providers are stepping in to provide flexible financing where traditional banks are retreat- ing due to risk constraints. They offer greater flexibil- ity but at higher costs compared to traditional bank financing. The share of foreign funds in domestic French transactions has significantly increased.
A general slowdown in transactional activity is now evident, attributable to the ECB’s tightening cycle since 2022 and the protectionist policies recently implemented by the new US administration. Some sectors – such as healthcare and digital health, TMT and infrastructure – remain resilient, while real estate, retail and export-heavy industries face headwinds. The energy and defence sectors are benefiting from increased investment and government support. High interest rates since 2022 have pushed up the cost of debt. Furthermore, the decline in valuations due to liquidity constraints has resulted in private equity sponsors retaining their assets for extended periods. Consequently, although numerous refinanc- ings and major restructurings have already taken place, the volume of debt maturing over the next two years remains substantial, with a peak anticipated in 2028. Innovative banking and finance techniques have emerged in response to these evolving market dynam- ics (see 1.5 Banking and Finance Techniques ). Basel III/IV implementation has also prompted banks to become more selective and to scale back their lending activities. Meanwhile, private debt funds are gaining traction, particularly in the mid-market and leveraged-finance segments. 1.2 Impact of Global Conflicts Global conflicts – whether geopolitical tensions, wars or trade disputes – have had a tangible impact on
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