Citi and BlackRock's HPS Launch €15 Billion European Private Credit Partnership Targeting UK and Continental Sub-Investment Grade Debt
Citigroup and BlackRock's private credit unit HPS Investment Partners have signed a partnership agreement to co-originate direct-lending deals across Europe, with a stated target of €15 billion (approximately $17.5 billion) in financings over the next five years. The initiative — branded the Citi/HPS Private Capital Program — will focus on sub-investment grade debt (loans or bonds rated below BBB-/Baa3, meaning they carry higher credit risk and therefore higher yields) for corporate and private equity clients across continental Europe and the UK. The programme will provide both senior debt (debt that ranks first for repayment in an insolvency) and junior credit (debt that sits below senior in the repayment waterfall and carries greater risk). The partners also plan to expand the collaboration to the Middle East. The deal reflects the growing institutionalisation of the European direct-lending market, where large private credit managers and major bank platforms are increasingly partnering — rather than competing outright — to scale deal origination. For UK borrowers in particular, the programme adds a significant new capital source at a time when traditional bank lending for leveraged and sub-investment grade transactions has been constrained by regulatory capital requirements. Separately, PitchBook data underlines a structural shift in how private credit lenders are assessing software companies: lenders are increasingly refusing ARR loans (annual recurring revenue loans — loans sized as a multiple of a company's recurring subscription income) in favour of EBITDA-based (earnings before interest, taxes, depreciation, and amortisation) pricing, reflecting concern that revenue alone is an insufficient repayment guarantee.
Why this matters
A €15 billion co-lending programme between Citi and HPS in the European and UK sub-investment grade market is a material addition to available private credit capacity at a time when deal flow is recovering. For banking lawyers, the programme structure — combining a bank's origination network with a private credit manager's balance sheet — requires careful documentation of economic participation, risk-sharing, and information barrier arrangements between the two parties. The shift away from ARR lending in software underlines that credit documentation teams are now spending more time on EBITDA definition carve-outs, add-backs, and covenant headroom in facility agreements, as lenders impose tighter controls on how borrower profitability is measured.
On the Ground
A trainee on a direct-lending transaction within this programme would manage the CP (conditions precedent) checklist — tracking delivery of security documents, legal opinions, and board resolutions before drawdown. They would also review security document packages and coordinate legal opinion delivery from local counsel in the relevant European jurisdictions.
Interview prep
Soundbite
Bank-private credit partnerships at €15bn scale are redrawing who provides sub-investment grade capital in Europe.
Question you might get
“What legal complexities arise when a bank and a private credit fund co-originate a loan facility, particularly around information sharing and competing economic interests in a borrower default scenario?”
Full answer
Citi and HPS have announced a €15 billion co-origination programme targeting sub-investment grade borrowers in the UK and continental Europe — one of the largest formal bank-private credit partnerships announced in the European market. For law firms, this creates demand for complex facility agreement drafting that accommodates both bank and non-bank lenders with different regulatory constraints and risk appetites. The trend reflects a structural shift in leveraged finance: banks constrained by regulatory capital requirements are increasingly syndicating risk to private credit platforms rather than holding it on balance sheet. This suggests that hybrid bank-private credit structures will become a dominant deal format in European leveraged finance through 2026, keeping banking and finance teams at full capacity.
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