Mon | Sep 25, 2017

Foreign ownership of US debt falls

Published:Friday | June 17, 2016 | 6:00 AM

Foreign holdings of United States Treasury securities slipped for the first time in six months, led by declines in Ireland and the Cayman Islands, the third- and fourth- largest owners of US debt.

The US Treasury Department says total foreign holdings declined 0.7 per cent to US$6.24 trillion.

The Cayman Islands, a Caribbean banking centre, reduced its holdings 2.5 per cent to US$258.5 billion, while Ireland cut back 2.4 per cent to US$257.9 billion.

China, the largest overseas owner of US debt, also reduced its holdings by a slight 0.1 per cent, to US$1.24 trillion. Japan, the second largest, raised its ownership 0.5 per cent to US$1.14 trillion.

The national debt is more than US$19 trillion and projected to grow. That means the United States will need to see continued strong foreign demand for Treasury debt.

Of that amount, US$13.7 trillion is publicly traded on financial markets and US$5.3 trillion is debt that the government owes itself in the form of holdings in trust funds such as the Social Security trust fund.

Foreigners own about two-fifths of the debt that is publicly traded. Of that amount, US$4.1 trillion is held by foreign governments, primarily central banks, who see Treasury securities as one of the world's safest investments.

- AP