Japanese financial institutions continue to seek higher-yielding offshore assets, including alternative credit products, such as US private credit, Fitch Ratings has said.
Fitch added that while stress in parts of the private credit market has drawn attention, it does not pose a systemic threat to major Japanese financial institutions. However, risk could accumulate through indirect channels across financial groups and become correlated in a stress scenario.
"Direct exposure to US private credit appears limited at Japan’s major institutions,” it stated.
“Higher domestic yields have improved the relative attractiveness of Japanese assets at the margin, but overseas yields remain higher, and we do not see evidence of a meaningful shift away from overseas higher-yielding assets.”
