Defence lending done right: navigating Europe’s rearmament wave
As defence spending accelerates across Europe - driven by programmes such as the Security Action for Europe (SAFE) initiative, which may provide up to €150 billion in loans to member states - private credit lenders are moving quickly to deploy capital. But the opportunity comes with real complexity.
In this exclusive 9Questions interview, CMS senior private credit counsel Jason Blick sets out what lenders and sponsors need to understand to operate confidently in this rapidly evolving market. Drawing on his experience advising defence-sector credits across the UK and continental Europe, Jason highlights the friction points that can undermine otherwise strong deals - from contracted backlog that appears bankable but proves difficult to enforce, to receivables security limited by defence specific assignment restrictions.
He explains why working capital and cash conversion dynamics have become the true credit drivers for suppliers undergoing rapid production ramp up, and how covenant packages are quietly shifting away from pure financial maintenance tests toward event risk, regulatory and contract focused protections tailored to the sector.
Jason also flags an emerging structural risk: the shift from strong demand to “permissioned demand” as localisation rules, foreign control sensitivities and supply chain pressures reshape the operating environment. For lenders looking to build resilient structures, he offers practical guidance on credit architecture - from cash control mechanics and eligibility diligence to liquidity first covenant design.
Whether you are an established defence lender or exploring the sector for the first time, this interview delivers essential, practitioner led insights on what it takes to get defence lending right.
