Tue | Sep 19, 2017

Cayman, Saudi Arabia big US treasury debt holders

Published:Thursday | May 19, 2016 | 5:00 AM

Foreign holdings of US treasury securities rose in March, with the United States Treasury Department revealing for the first time in four decades how much Saudi Arabia owns.

In its latest report, the Treasury Department said Monday that total holdings increased 0.8 per cent to a record US$6.29 trillion. The figure climbed even though China, the largest holder of treasury debt, trimmed its portfolio by 0.6 per cent to US$1.24 trillion.

The breakout of the investments held by Saudi Arabia makes the country the 13th largest foreign holder of treasury securities. The Cayman Islands, which previously was included in a grouping of Caribbean banking centres, ranks No. 3, behind China and Japan. It held US$265 billion in March, up 3.9 per cent from February.

For the first time since 1974, when the government began releasing data on foreign ownership of treasury securities, the report broke out ownership for specific countries that it had always lumped together such as "oil exporting nations" and "Caribbean banking centres".

The report showed that Saudi Arabia in March held US$116.8 billion in treasury debt, down 2.5 per cent from February.

A Treasury spokesperson said that the decision to start listing Saudi Arabia's holdings separately was not linked in any way to recent warnings from the government of Saudi Arabia. Last month Saudi Arabia said that it could begin selling off its US investments if Congress passes a law allowing the country to be held responsible in US courts for any role in the September 11, 2001, terrorist attacks.

Treasury spokesperson Whitney Smith said de-grouping certain countries is an effort to make the data more useful.

"We concluded that it was consistent with transparency and the law to disclose the data in a disaggregated fashion," Smith said in a statement.

The new report showed that Japan, the second largest foreign holder of debt, increased its holdings by 0.4 per cent to US$1.14 trillion in March.

The US$6.29 trillion in total foreign holdings of treasury debt was a modest 1.9 per cent higher than a year ago.

Of that total, 65 per cent is held by foreign governments, primarily central banks.

The US national debt now stands at US$19.16 trillion. With the federal budget deficit projected to grow over the next decade, the United States will need to see continued strong foreign demand for treasury debt to help finance its growing borrowing needs.

- AP