Japan Bank sector: Expert call report: The private credit market from a regulatory perspective

Research evidence excerpt

Japan Bank sector: Expert call report: The private credit market from a regulatory perspective

J P M O R G A N Asia Pacific Equity Research

06 July 2026

Japan Bank sector

Expert call report: The private credit market from a

regulatory perspective

On July 6, we hosted Tomoyuki Shimoda, specially appointed professor at Rikkyo Japan Equity Research

University's College of Economics, for a session on private credit from a regulatory

Banks

perspective and a comparison with the Global Financial Crisis. Mr. Shimoda has

held key positions at the BoJ, Bank for International Settlements (BIS), and Takahiro Yano, CFA AC

International Monetary Fund (IMF). He noted that even regulators lack sufficient (81-3) 6736-8616

takahiro.yano@jpmorgan.com

data on the private credit market, leaving the impression that the actual situation

Kohichi Takano

is difficult to assess. The private credit issue involves various discussion points, (81-3) 6736 8621

which we divide into two axes: (1) whether liquidity issues emerge first or (2) kohichi.takano@jpmorgan.com

whether asset quality deteriorates first (a shock in which both exacerbate each other JPMorgan Securities Japan Co., Ltd.

is possible). On liquidity, he noted that he views the volume of redemption requests

for US-listed BDCs and the pace of fund inflows as the canary in the coal mine. On

asset quality, his focus is on private credit lending to AI companies.

Private credit asset quality and AI investments are inseparable issues: First,

regarding issues not directly related to AI, private credit default rates remain lower

than during the pandemic and have not continuously worsened since 2024.

However, he said that an increase in usage of payment in kind (PIK) at origination

process of BDC lending needs to be noted.