Medium-sized European companies will likely face the toughest struggle when it comes to scaling multi-billion financing walls over the coming years, Standard & Poor's warned in a report today.

Mid-cap companies account for around a third of the region's economy and employment.

They are defined as having revenues below €1.5 billion and debt below €500m, need to raise up to €3.5 trillion in debt over the next five years, according to the ratings agency.

Around €2.7 trillion of that relates to refinancing existing loans, while €800 billion is needed for capital investment and expansion.

"Deleveraging and tightening regulation are creating a scarcity of finance for European companies, and the problem is particularly acute for medium-sized businesses," S&P said. This sector of mid-cap companies represents a "squeezed middle", it added.

They will struggle with the pull-back in bank lending because they are considered to be too small to access debt capital markets and yet too large to qualify from schemes such as the UK's funding-for-lending, designed to help smaller firms.

S&P and rivals, Moody's and Fitch, have all flagged likely future financing problems facing European corporates due to various factors.

To combat these funding problems, issuers have started exploring alternative funding routes, like the European private placement market, and smaller bond exchange platforms in countries like France, Italy and Spain. In the UK, a steady stream of bonds has come to the market this year, targeted at retail investors.

In today's report, S&P said that even a 5% contribution to the financing requirements from funding sources beyond the traditional loan or bond markets would amount to a meaningful €35 billion each year. However, part of the problem - and perhaps the most tricky part to remedy - is that investors are being deterred by a lack of transparency.