Japanese institutional investors face increasing difficulties in credit secondary market participation, according to discussions at PEI Group's Private Debt Investor Tokyo Forum. Information asymmetry and structural barriers are preventing some Japanese LPs from allocating to these strategies despite growing interest in the asset class. These challenges highlight unique regulatory constraints in Japan's credit markets.

The primary obstacles stem from the comparative granularity of underlying exposures in credit secondary transactions. Market participants lack sufficient visibility into portfolio compositions, creating significant due diligence challenges for Japanese institutions. This opacity makes risk assessment and capital allocation difficult.

Shotaro Sese, head of private markets at Sony Bank, explicitly stated his institution was "not able" to invest in credit secondaries. The bank's position reflects broader concerns about alignment between investment processes and complex secondary credit structures, representing missed opportunities for Japanese capital in an expanding market.