Europe’s weakest corporate borrowers face a mounting refinancing wall as central banks keep interest rates higher for longer. Companies heavily indebted from the zero-rate era, including Merlin Entertainments and Stow Group, now grapple with soaring borrowing costs and a €5.3 billion wave of maturing debt due by 2028.
The Central Bank Pivot and the Low-Quality Credit Squeeze
Borrowing money is getting more expensive again across international markets. For most European corporations, this shift remains uncomfortable yet entirely manageable.
After cutting rates through 2025, the European Central Bank altered course by raising its deposit rate in June, marking its first hike in nearly three years. This came as regional energy prices and inflation surged due to the war involving Iran. A second increase this month brought the ECB deposit rate to 2.5%. Across the Atlantic, the US Federal Reserve mirrored these moves, lifting its benchmark rate to a range of 3.75% to 4% in September.
For a fundamentally healthy company, minor rate adjustments barely register. For a firm already fighting for survival, these hikes create a stark boundary between securing a lifeline loan or facing default. Torsten Slok, chief economist at Apollo Global Management, captured this dynamic in a note published on Friday, warning that “higher for longer is a slow squeeze for low-quality credit.” Slok emphasized that these rate hikes operate with a lag and strike unevenly across sectors, meaning the pressure builds gradually over successive maturity dates.
A Looming Refinancing Wall for CCC-Rated Borrowers
Many vulnerable enterprises loaded up on cheap credit during an era of near-zero interest rates. Today, they sit comfortably within or near the CCC territory of the credit-rating scale, hovering just steps away from default.
S&P Global Ratings underlined these vulnerabilities in a July 31 report focusing on the ten largest CCC-rated borrowers held within European collateralised loan obligations, or CLOs. These financial structures bundle hundreds of corporate loans into diversified portfolios financed by investors. According to S&P data at the end of June, European CLOs held €5.3 billion of loans tied to CCC-rated companies maturing specifically in 2028. This figure represents a sharp jump from €3.5 billion recorded at the close of 2025. Crucially, six of the ten largest CCC borrowers identified by S&P face critical debt maturities falling between 2027 and 2028.
Inside the Vulnerable Portfolio: From Logistics to Leisure
The squeeze touches surprisingly familiar brand names spanning consumer leisure, supply chain infrastructure, and industrial software. Understanding who bears the brunt requires looking closely at how individual companies manage their impending debt walls.
At the industrial end, Belgium’s Stow Group manufactures warehouse storage systems and automated logistics equipment essential for modern supply chains. Backed by majority shareholder Blackstone, Stow carries a CCC+ rating with a stable outlook, according to S&P. European CLOs held €364 million of its loans, with its next major debt maturity slated for September 2028 and senior debt yielding approximately 9% in July metrics.
Meanwhile, consumer leisure giant Merlin Entertainments operates major international attractions, including Legoland parks, Madame Tussauds, Sea Life aquariums, and the London Eye. Controlled jointly by KIRKBI—the Lego family investment vehicle—alongside Blackstone and CPP Investments, Merlin faced significant scrutiny as European CLOs held €583 million of its loans. S&P snapshots in July showed its senior debt yielding between 12% and 13%. Fortunately for the company, market sentiment stabilized in early September when Merlin secured new financing to address debt maturing in 2027. Its 4.5% euro bond maturing in November 2027 subsequently rebounded from roughly 95 cents to about 98 cents on the euro, dropping its implied yield to a more manageable 6% to 7% and easing immediate refinancing anxieties.
| Company | Sector | Key Stakeholder | Primary Rating & Exposure Details |
|---|---|---|---|
| Colisée | Elderly Care / Nursing Homes | Restructured Lenders | Upgraded to CCC+ in May after restructuring plan pushed debt maturities to 2031. |
| Stow Group | Warehouse Storage & Logistics | Blackstone | Rated CCC+; €364 million in European CLO loans with maturity in September 2028. |
| Merlin Entertainments | Attractions & Theme Parks | KIRKBI, Blackstone, CPP Investments | Secured new financing in September 2027 to alleviate immediate refinancing pressures. |
| Solera | Automotive Claims Software | Vista Equity Partners | Rated CCC+; €515 million held in European CLO debt ahead of March 2028 maturity. |
Other firms on the S&P watch list have already undergone dramatic financial surgery. France’s Colisée, an operator of nursing and elderly-care facilities across Europe, had to deal with a severe debt burden that led to a Paris court approving a comprehensive restructuring plan in April. Under the agreement, lenders swapped portions of their loans for direct equity ownership, pushing the bulk of the remaining debt out to 2031. S&P categorized the transaction as a default before upgrading Colisée to CCC+ in May, leaving its senior debt yielding around 5% by July as the immediate pain subsided.
Similarly, US-based Solera provides essential software platforms for motor vehicle insurers and repair shops to estimate accident damage and manage claims. Owned by Vista Equity Partners, Solera carries a CCC+ rating with European CLOs holding approximately €515 million of its debt, with its next major financial test arriving in March 2028.
The Broader Economic Takeaway
The situation facing these low-rated enterprises highlights a broader truth about the current economic transition. As monetary authorities maintain higher interest rates to combat stubborn inflationary pressures, the delayed impact continues to ripple through corporate balance sheets. Every upcoming debt maturity serves as an individual test for corporate survival. While well-capitalized industry leaders absorb higher costs with ease, weaker market players must continually renegotiate, restructure, or pay steep premiums to secure their financial futures.
