Japan rules out major domestic risks from private credit for now

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TOKYO, April 10 : Japanese Finance Minister Satsuki Katayama said on Friday private credit does not pose a major issue domestically at present but noted risks linked to the $2 trillion industry could be discussed at next week's G7 finance meeting.

"Japan's exposure to the private credit market is not particularly large. It's not that there is no investment at all, but we do not view this as a major issue domestically at this point," she said at a regular press conference.

Her comments come as Japan's Financial Services Agency conducts checks on private credit exposure at major financial institutions, amid mounting concerns over emerging strains in the $2 trillion global private credit industry.

Katayama said she keeps herself constantly updated on the developments through briefings from the financial watchdog, adding that questions about whether risks are building and being adequately monitored could be raised when finance ministers from the Group of Seven economies meet in Washington next week.

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"Even so, at present, I do not believe the situation has developed into problems on the scale of past crises," she added.

Private credit funds in the United States have faced high redemption requests as jittery retail investors bolt for the exits amid concerns over transparency, valuations and artificial intelligence-related disruption.

Japan's private credit market remains small due to companies' relatively easy access to traditional bank lending, but Japanese banks have stepped up financing to global private credit funds in recent years in search of higher returns.

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