The Expansion and Diversification of Private Credit Funds
September 25, 2026
IWAMURA Yuko, KOGA Sena, JIMBO Masahiro, HIGUCHI Tomoki*
Financial System and Bank Examination Department
*Currently in the Payment and Settlement Systems Department
Abstract
The private credit (PC) fund market has been expanding, particularly in the United States. The core strategy of PC funds has typically involved raising long-term capital from institutional investors and providing direct lending, primarily to medium-sized and small companies with lower creditworthiness, under strict credit management. However, in recent years, continued capital inflows have intensified competition among funds engaged in corporate lending, leading some to change their lending conditions. PC funds are diversifying in both asset types and structures; asset-based finance (ABF) funds backed by cash flows from specific assets and semi-liquid funds targeted at retail investors are growing. This suggests a shift in the risk profiles of some PC funds. In Japan, as financial institutions and institutional investors have been strengthening their interconnectedness with PC funds through investment and lending, it is necessary to pay attention to the shifting risk profiles and closely monitor the PC funds' investment practices as well as their credit developments.
Notice
The Bank of Japan Review Series is published by the Bank to explain recent economic and financial topics for a wide range of readers. This report, 2026-E-13, is a translation of the Japanese original, 2026-J-12, published in September 2026. Views expressed are those of the authors and do not necessarily reflect those of the Bank.
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