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Japanese pension funds, insurers eye domestic credit market

A recent Bloomberg report said Japan's investors are increasingly turning to domestic private credit deals, seeking higher returns amidst negative interest rates. Preqin data shows a surge to 236 limited partners, including pension funds and insurers, investing in private capital by September this year, a significant jump from 2017. Despite being a small fraction of the global market at about USD8bn, Japan's private credit sector is growing, driven by a spike in leveraged buyouts and corporate restructuring. Investors are drawn to potential 10% returns, outpacing the less than 1% yield of Japanese bonds. However, concerns loom with the anticipated rise in interest rates next year, posing risks for debt repayment.


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