KKR has begun marketing a debt deal tied to PayPal's buy now, pay later (BNPL) business in Germany, the first transaction of its kind in Europe, according to sources cited by Bloomberg.

The deal is designed to refinance KKR’s exposure to PayPal’s German lending unit. The firm funds the payment platform’s European BNPL activity through a forward‑flow arrangement, under which it agrees to backstop loans before they are issued. The structure mirrors a similar tie‑up between PayPal rival Klarna and Elliott Investment Management. BNPL products let shoppers split larger one‑off purchases into smaller instalments over a set period, and the market has grown sharply in recent years, with PayPal, Klarna, and Affirm among its largest players. Analysts say the forward‑flow model provides KKR with steady cash flows while limiting direct credit risk.

Fitch Ratings noted that PayPal’s BNPL losses are typically minimal, pointing to the loans’ brief duration and robust underwriting, and set a default expectation of 1.6% on the underlying pool. The offering is a rare chance for European investors to gain exposure to this form of financing. Whereas Affirm has regularly tapped US securitisation markets to fund its lending, comparable deals have been scarce in Europe, making KKR’s transaction a notable test of appetite among the region’s credit investors. Investors are watching the deal closely as it could set a precedent for future BNPL‑linked debt offerings in the region.

BNP Paribas, KKR Capital Markets, and Société Générale are arranging the deal.