As 2025 begins, we gathered insights from our experts as they consider the challenges and opportunities that could define 2025. They are optimistic about the opportunities while considering the areas that may be most challenging to clients in 2025 and beyond. Part One focuses on private credit and infrastructure from a macro-regional perspective. Read Part Two for sector-specific trends including private equity, renewable energy, and regulatory shifts.
Interest rate cuts improve outlook for M&A globally
John Cuciti, managing director, said his outlook for M&A in 2025 is optimistic, citing recent interest rate cuts, some reduction in geopolitical risk, and high cash levels. M&A volumes in the U.S. climbed 10% to $1.55 trillion in 2024, while Europe and Asia Pacific saw a 22% and 11% jump respectively, with volumes hovering around the $800 billion mark, according to Reuters[1].
John noted, “The rate-cutting cycle that started in 2024 should pave the way for greater M&A activity. Lower interest rates are typically an M&A catalyst because they reduce the cost of acquisition financing.
“Although geopolitical tension is likely to remain a risk globally, clarity around political leadership, particularly in the U.S. could also increase executive confidence to pursue acquisitions,” he says, with the Trump administration signaling it will likely favor a pro-business approach to policy, seeking to remove perceived regulatory red tape where possible.
Finally, John noted, “High levels of uncommitted corporate capital could also fuel M&A activity. Non-banking firms in the U.S. have been maintaining healthy levels of cash balances, and private equity sector firms also have sizeable levels of dry powder.”
Private lending will continue to increase in U.K.
Commercial Director David Bell provided his point of view on the asset-backed structured finance and capital market prospects for 2025 and beyond. “In 2025 the trickle-down impact of Basel 3.1 and the impact of quantitative easing withdrawal will likely result in a continued decrease in overall bank lending globally due to increased capital allocation costs,” he said.
David noted that the gap left by decreased bank lending has been and will continue to be filled by an increase in private lending, either directly or via different forms of investments. “In the U.K., we expect further inbound investment from global pension funds and insurance companies as their investment criteria evolves. As a result of U.K. government reforms for combining local authority pension funds, it’s likely we will see increased U.K. infrastructure investment from this sector. It’s also likely that refinancing of existing mortgage-backed securitization transactions during 2025 with a lower interest rate environment will continue.”
Ireland’s positive outlook on private credit bolstered by AIFMD 2.0
Among the growth asset classes expected to thrive in 2025 are private credit, real estate, private equity, and venture capital. One area of optimism is private credit funds. Ireland’s position as a premier domicile for credit-focused managers is set to be bolstered by the anticipated implementation of AIFMD 2.0. This regulatory development will introduce changes to loan origination rules, further enhancing Ireland’s attractiveness as a hub for private credit managers.
“The changes introduced by AIFMD 2.0 will consolidate Ireland as the leading jurisdiction in private credit fund structuring,” said Liam McHugh, head of Fund Administration Ireland. “We’re especially bullish about the potential for 2025, as these regulatory updates align with the increasing demand for private credit investment strategies.”
While the opportunities are vast, fund managers and stakeholders must remain vigilant about navigating regulatory complexities and market volatility. Staying ahead of these challenges will require adaptability, foresight, and leveraging Ireland’s long established fund ecosystem to its fullest potential.
Prospects for Latin America capital markets remain optimistic
Managing Director and Head of Latin America Trust and Agency Services Michael Morcom said Latin America continued its post-pandemic rebound in 2024, bringing exciting opportunities to the market. “For example, the international debt capital markets were constructive throughout the year, as evidenced by the return of Argentine corporates, successful debt-for-nature swaps, and interesting structured finance offerings,” he noted.
He said that while some challenges remain, he remains cautiously optimistic about the prospects for the region in 2025. “We anticipate a continued pick-up in infrastructure investment, especially in the energy, transportation, and digital asset sectors and expect to see public-private partnerships, development finance institutions, and innovative financing structures being used to finance large-scale projects.
“In addition, private credit will continue to increase in relevance and scale in Latin America, the region’s fintech sector is expected to experience another year of strong growth, and there are indications that regional M&A activity may finally rebound next year.”
Director, Trust and Agency Services Rafa Diaz agreed that the capital markets in Latin America are poised for dynamic development in 2025. “It’s likely that the region’s markets will be shaped by global economic shifts, regional political landscapes, and emerging opportunities in infrastructure and project finance.”
Project finance will be a cornerstone of Latin America’s economic growth in 2025, in sectors like renewable energy, transportation, and digital infrastructure. Rafa said infrastructure investment will dominate project finance, particularly in energy, transportation, and digital connectivity. “Public-private partnerships are likely to grow and will play a crucial role in bridging funding gaps for large-scale projects.”
“While Latin America’s capital markets face significant challenges, the convergence of innovation, sustainable finance, and infrastructure development offers immense potential for growth and transformation. Strategic investment in project finance will not only support economic resilience but also help the region achieve long-term sustainability and inclusivity,” he concluded.
Read more about these themes in Rafa’s recent article Spotlight on Project Finance in Latin America.
Project finance key to support renewable energy, TMT, and critical minerals
Demand for renewable energy continues to outpace supply with deployment of new capacity proceeding unevenly across solar, wind, and battery storage.[2] Christian Oakley-White, managing director, EMEA Project Finance, said, “Despite near-term policy challenges, the longer-term momentum and transitional trends underpinning renewable energy projects within the wider energy mix will likely remain and evolve in concert with technological, practical and energy security-related considerations. Solar and wind power are likely to see the largest increase in project finance over the next 24 months.
“Over the longer-term, addressing the inherent intermittency challenges will be key to sustaining the impact and growth trajectory of these sectors. Consequently, the development of energy and battery storage technologies, hybrid energy systems and non-intermittent power sources—such as green hydrogen, natural gas and nuclear, including small modular reactors—will become increasingly important to sustaining the holistic renewable energy mix and momentum.”
The technology, media, and telecom (TMT) sector will also represent a key growth sector. Significant activity is expected across increasingly integrated industry sectors from the telecom operators seeking to protect and diversify their business models, through technology hyperscalers developing the infrastructure to support the exponential usage of their technology platforms and AI. The infrastructure and power required to meet this demand will further drive innovations and development around connectivity and power generation.
Additionally, Christian suggested that infrastructure development, ranging from transport to social, will account for a significant proportion of expected activity. Related projects are required to sustain both aging populations in developed markets, as well as to drive the economic development and to enhance the quality of life of growing populations in emerging markets. “The relative risk, pace, and level of returns in this segment compared to renewable energy generation projects have traditionally resulted in the greater involvement of government or multilateral development bank financing, despite efforts to crowd in private financing. Whether private credit and more innovative financing structures are applicable remains to be seen.”
Christian said a final, fast emerging sector is that of critical minerals covering both the development of assets and mineral processing capacity. “Driven by a combination of geopolitics and energy transition-related needs, success in this sector will be fundamental to securing future economic development and leverage. With China currently dominating the processing capacity, the focus and financing of resource and mineral asset development and of new supply chains outside of current structures is required. The U.S.-led Minerals Security Partnership, including 14 countries and the EU, has been established with the stated objective of catalysing public and private investment in this regard.”
Ready for more insight? Read Part Two of our 2025 Perspectives lookahead for analyzing trends like sustainability and renewables, the continued growth of private equity fundraising, and the areas ripe for innovation.
How CSC can help
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