{"id":4878,"date":"2026-10-27T01:54:39","date_gmt":"2026-10-27T00:54:39","guid":{"rendered":"https:\/\/www.ondara.group\/private-debt-middle-market-2026\/"},"modified":"2026-10-27T01:54:39","modified_gmt":"2026-10-27T00:54:39","slug":"private-debt-middle-market-2026","status":"publish","type":"post","link":"https:\/\/www.lp.ondara.group\/en\/private-debt-middle-market-2026\/","title":{"rendered":"Private debt and the middle market: 2026 outlook"},"content":{"rendered":"<p><strong>The middle market is the segment of mid-sized companies and developers that private lenders finance, and in October 2026 competition for it has intensified.<\/strong> Private debt managers have raised more capital than ever but are making fewer loans, and some are moving down in size to find deals. For an individual investor in Spain, understanding this shift helps separate market noise from what matters in a specific transaction.<\/p>\n<p>This is an educational text. It is not investment advice.<\/p>\n<h2>What the middle market means in private debt<\/h2>\n<p>There is no single definition. In general, the middle market covers mid-sized companies: too large to rely on a single bank and too small to issue debt in the open markets. Each data provider sets its own thresholds, for example based on a company&#8217;s operating profit.<\/p>\n<p>Spanish real estate works in a similar way. Large developers have easy access to banks; mid-sized or early-stage projects fit better with a private lender that looks at the project, the asset and the exit plan. That is the territory of <a href=\"https:\/\/www.ondara.group\/en\/direct-lending-europe-2026\/\">direct lending in Europe<\/a> and of alternative mortgage-backed finance.<\/p>\n<h2>Trends: what is happening worldwide and in Spain<\/h2>\n<ul>\n<li><strong>Worldwide (15 October 2026).<\/strong> According to <a href=\"https:\/\/finance.yahoo.com\/markets\/stocks\/articles\/private-credit-faces-deployment-squeeze-183333828.html\" target=\"_blank\" rel=\"noopener\">Reuters<\/a>, citing Preqin and PitchBook\/LCD, direct lending funds raised USD 129.15 billion in the first nine months of 2026 (+35%, the highest total in the series since 2016), while estimated third-quarter lending volume fell 28% to USD 49.77 billion. Some borrowers have returned to the syndicated market: USD 16.39 billion of direct loans were refinanced there, against USD 2.60 billion moving the other way.<\/li>\n<li><strong>Worldwide (22 October 2026).<\/strong> <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2026-10-22\/private-credit-s-small-ball-has-lenders-fight-for-every-dollar\" target=\"_blank\" rel=\"noopener\">Bloomberg<\/a> describes a weak quarter for new direct lending deals and growing competition for smaller companies, where borrowers have more negotiating power. The article is paywalled, so we cite only its general lines.<\/li>\n<li><strong>Spain (October 2026).<\/strong> The <a href=\"https:\/\/www.pwc.es\/es\/real-estate\/observatorio-financiacion-alternativa-colateral-hipotecario-espana.html\" target=\"_blank\" rel=\"noopener\">Observatorio de Financiaci\u00f3n Alternativa con Colateral Hipotecario en Espa\u00f1a (Observatory of Alternative Mortgage-Backed Finance in Spain), with market analysis by PwC and legal framework by Cuatrecasas<\/a>, estimates a volume of EUR 3,891 million in 2026 (+51%) and 737 transactions, compared with 594 in 2025. These are forecasts, not final data. We covered it in <a href=\"https:\/\/www.ondara.group\/en\/alternative-mortgage-lending-spain-2026\/\">alternative mortgage lending in Spain<\/a>.<\/li>\n<\/ul>\n<h2>What it means when lenders move down in size<\/h2>\n<p>When there is more capital than attractive deals, managers have two options: wait or widen the pool of borrowers. Moving down to smaller companies is one way to widen it. It has advantages and risks.<\/p>\n<div class=\"tabla-seo\">\n<table>\n<caption>Source: Ondara Group analysis based on Reuters (15 October 2026), Bloomberg (22 October 2026) and sector commentary<\/caption>\n<thead>\n<tr>\n<th>Scenario<\/th>\n<th>Advantage<\/th>\n<th>Risk<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Lender that waits<\/td>\n<td>Keeps pricing and collateral discipline<\/td>\n<td>Capital stays uninvested for longer<\/td>\n<\/tr>\n<tr>\n<td>Lender that moves down in size<\/td>\n<td>Access to more deals and borrowers<\/td>\n<td>Smaller borrowers and more analysis per deal<\/td>\n<\/tr>\n<tr>\n<td>Lender that loosens terms<\/td>\n<td>Closes faster<\/td>\n<td>Less safety margin if something goes wrong<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p><img data-dominant-color=\"8a94a0\" data-has-transparency=\"false\" style=\"--dominant-color: #8a94a0;\" decoding=\"async\" src=\"https:\/\/www.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market.webp\" alt=\"Modern residential buildings, real assets behind middle market private debt\" width=\"1680\" height=\"945\" class=\"aligncenter size-full wp-image-4874 not-transparent\" loading=\"lazy\" srcset=\"https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-200x113.webp 200w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-300x169.webp 300w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-400x225.webp 400w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-600x338.webp 600w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-768x432.webp 768w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-800x450.webp 800w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-1024x576.webp 1024w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-1200x675.webp 1200w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market-1536x864.webp 1536w, https:\/\/www.lp.ondara.group\/wp-content\/uploads\/2026\/10\/edificios-viviendas-deuda-privada-middle-market.webp 1680w\" sizes=\"auto, (max-width: 1680px) 100vw, 1680px\" \/><\/p>\n<h2>Middle market data<\/h2>\n<p>The available data are mostly American and do not always agree between providers. Here is a sample, with dates:<\/p>\n<div class=\"tabla-seo\">\n<table>\n<caption>Source: Octus (24 July 2026), Q2 2026 data, US market; Observatorio de Financiaci\u00f3n Alternativa con Colateral Hipotecario en Espa\u00f1a (PwC and Cuatrecasas), October 2026<\/caption>\n<thead>\n<tr>\n<th>Indicator<\/th>\n<th>Figure<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Spread per unit of leverage, lower middle market (US)<\/td>\n<td>145 bps (+6% quarter on quarter)<\/td>\n<\/tr>\n<tr>\n<td>Spread per unit of leverage, upper middle market (US)<\/td>\n<td>112 bps (+4% quarter on quarter)<\/td>\n<\/tr>\n<tr>\n<td>Spread per unit of leverage, large cap (US)<\/td>\n<td>98 bps (+8% quarter on quarter)<\/td>\n<\/tr>\n<tr>\n<td>Average ticket, alternative real estate finance in Spain<\/td>\n<td>EUR 4.9m (range EUR 0.8-58.3m)<\/td>\n<\/tr>\n<tr>\n<td>Transactions in Spain (2025 \/ 2026 forecast)<\/td>\n<td>594 \/ 737<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Sources differ: one asset manager sees lower middle market spreads staying steady, while Octus shows an increase in the second quarter. This may be due to different methodologies, so it is wise not to extrapolate to Spain. In Spain the reference is the Observatory: the average ticket is EUR 4.9 million, in a range of EUR 0.8 to 58.3 million, with an average LTV (loan-to-value ratio) of 55% and an average term of 28 months.<\/p>\n<h2>The Spanish case: banks, developers and private finance<\/h2>\n<p>Spanish banks remain very competitive with large developers. According to <a href=\"https:\/\/theobjective.com\/economia\/banca\/2026-10-14\/credito-viviendas-hipotecas-bancos-promotoras\/\" target=\"_blank\" rel=\"noopener\">The Objective<\/a> (14 October 2026), using Banco de Espa\u00f1a data, outstanding lending to property development reached EUR 75,227 million in June 2026, the highest level since 2022. Even so, it is far below the pre-2008 peaks.<\/p>\n<p>That leaves room for the mid-sized segment: projects that banks do not cover because of stage, size or term. Competition among private lenders does not remove that need, but it can affect margins and the demands placed on transactions, such as LTV or covenants.<\/p>\n<h2>Risks to consider<\/h2>\n<ul>\n<li><strong>Weaker discipline.<\/strong> With plenty of capital available, some deals may close with fewer guarantees or less control.<\/li>\n<li><strong>Smaller borrowers.<\/strong> They usually have fewer resources to absorb a drop in sales or a construction delay.<\/li>\n<li><strong>Illiquidity and term.<\/strong> Your money is tied up until the transaction exits.<\/li>\n<li><strong>Asset value.<\/strong> Property collateral mitigates risk but does not remove it: the value of the property can fall and enforcement takes time.<\/li>\n<li><strong>Provisional data.<\/strong> The 2026 figures are estimates and may be revised.<\/li>\n<\/ul>\n<p>All investments carry risk, including partial or total loss of capital.<\/p>\n<h2>How we work at Ondara<\/h2>\n<p>Ondara Group is an alternative investment manager based in Barcelona since 2018. We analyse each transaction individually and back it with real assets as collateral. We aim to diversify and keep direct contact with the management team. We pursue target double-digit returns, which are never guaranteed. The minimum investment is EUR 25,000. You can meet the team on the <a href=\"https:\/\/www.ondara.group\/en\/who-we-are\/\">who we are<\/a> page.<\/p>\n<h2>Frequently asked questions<\/h2>\n<h3>What is the middle market?<\/h3>\n<p>It is the segment of mid-sized companies, between small businesses and large corporations. Thresholds vary by source.<\/p>\n<h3>Why are private lenders moving down to smaller companies?<\/h3>\n<p>Because there is more capital available than attractive large deals, and some borrowers are returning to the syndicated market, according to Reuters and Bloomberg.<\/p>\n<h3>Is more competition between lenders good for the investor?<\/h3>\n<p>Not necessarily. It can put pressure on margins and on the guarantees required. That is why it pays to look at the LTV, the collateral and the exit plan.<\/p>\n<h3>Does this affect real estate private debt in Spain?<\/h3>\n<p>The Spanish market is different: alternative finance accounts for around 20% of lending, according to the Observatory, and mid-sized projects still need private lenders.<\/p>\n<h3>What should I check before investing in private debt?<\/h3>\n<p>The value and ownership of the asset, the LTV, the term, the exit plan and the information you will receive during the life of the transaction.<\/p>\n<h2>In summary<\/h2>\n<ul>\n<li>Managers are raising record capital but placing fewer loans in 2026.<\/li>\n<li>Some are moving down to smaller companies; market data are mixed and mostly American.<\/li>\n<li>In Spain, the mid-sized real estate segment still needs private finance.<\/li>\n<li>More competition demands more investor discipline: collateral, LTV and exit.<\/li>\n<li>All investments carry risk, including loss of capital.<\/li>\n<\/ul>\n<p>If you would like to know how we invest, <strong><a href=\"https:\/\/www.ondara.group\/en\/investors\/\">register as an investor<\/a><\/strong> and we will explain how it works. The minimum investment is EUR 25,000.<\/p>\n<p><em>This article is for information purposes only and does not constitute an investment recommendation or financial advice. All investments carry risks, including the possible loss of the capital invested, and past or target returns do not guarantee future returns. Analyse each opportunity with a professional before investing.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Private debt and the middle market in 2026: more capital than deals, lenders moving down in size and what it means for an individual investor in Spain.<\/p>\n","protected":false},"author":1,"featured_media":4507,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20,22],"tags":[],"class_list":["post-4878","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-inversiones-alterativas","category-private-credit"],"_links":{"self":[{"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/posts\/4878","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/comments?post=4878"}],"version-history":[{"count":0,"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/posts\/4878\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/media\/4507"}],"wp:attachment":[{"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/media?parent=4878"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/categories?post=4878"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lp.ondara.group\/en\/wp-json\/wp\/v2\/tags?post=4878"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}