Bone-dry credit markets and Europe's sovereign debt crisis are weighing on private equity firms' ability to make deals, leading some investors to rein in their allocations to such firms across the region, a survey has found.

One in five investors said they planned to reduce their exposure to European private equity because of the continent's debt crisis, according to the survey conducted by private equity firm Coller Capital.

A further 69 percent said they would maintain their current levels of exposure to Europe, while 11 percent said they would increase their investments.

European buyouts have all but ground to a halt in the second half of the year, with many auction processes pulled or postponed until credit conditions improve.

People are looking at the euro zone at the moment and thinking, 'We don't know which way things are going to go', said Jeremy Coller, chief investment officer at Coller Capital.

We're not quite in a credit crunch now, but people are apprehensive that there might be one. The debt markets are selective and fragile, so it's difficult for private equity to structure deals.

Concerns about the buyout industry's ability to access financing for new deals are intensified by a looming wall of debt maturities over the next two to five years, which will be tough and expensive to refinance.

Private equity groups have $365 billion of loans due by the end of 2016, according to Thomson Reuters LPC/DealScan data.

Will there be portfolio companies failing as a result of that? Yes there will, Coller said. Not every portfolio company will make it through the recession, but private equity portfolios as a whole will make it.

Buyout firms have typically been good at negotiating with banks about restructuring and refinancing debt, and at finding ways to support companies during the crisis, Coller added.

The problems across the continent are leading European investors to take a gloomier view on the potential returns from private equity than their peers in the United States and Asia.

Only one in six expects their private equity investments to achieve returns of 16 percent or more in the medium term, the study found, compared with half in North America and one in three globally.

(Reporting By Yeganeh Torbati; Editing by Simon Meads and Will Waterman)