Foreign investments in US debt - Caribbean No. 5 creditor

Published: Wednesday | August 19, 2009

Many Americans know that China holds the most United States (US) Trea-sury debt, followed by Japan. But who would expect a group of Caribbean countries to collectively come in fifth?

Or that Luxembourg would come in eighth?

A look at which countries hold large amounts of Treasury securities - investments in US debt - provides an interesting glimpse into the world economy. Some governments - like China - have amassed large holdings in an effort to keep their currencies from becoming too valuable against the dollar, which keeps their exports to the United States cheaper.

Others have large holdings because of their financial centres.

The fifth-largest holder of Treasurys is a collection of Caribbean countries, including The Bahamas, Bermuda, and the Cayman Islands, with US$189.7 billion. The Treasury Department collectively calls the group 'Caribbean Banking Centres'.

Financial centre

The Cayman Islands, for example, has become a major financial centre. It is home to 9,000 hedge funds and other investment vehicles, according to a report last year by the Government Accountability Office. Those funds likely hold some Treasury securities.

Many investment funds use the Cayman Islands as an offshore tax haven, according to the GAO report.

Luxembourg, meanwhile, is the eighth-largest holder of US Treasury securities, with $104.2 billion, just behind Russia at US$119.2 billion.

The small country of 460,000 has a healthy banking sector whose companies are among Europe's leading asset managers, according to the Luxembourg embassy's Website. Its large holdings of Treasurys likely reflect that reality. A call and email to the Luxembourg embassy seeking comment weren't returned.

The data on Treasury holdings was released Monday as part of a monthly report from the Treasury Department on foreign holdings of US Treasurys and other securities.

Separately, the Treasury report showed that about US$31.2 billion in capital flowed out of the United States in June, about half the level of outflows in May. But economists said much of that was due to sales of short-term investments such as Treasury bills, and didn't reflect an overall loss of confidence in US government debt.

Here are some other details that can be found in the Treasury International Capital report.

- AP



US$776.4 billion: The amount of Treasury securities held by China at the end of June

US$711.8 billion: The amount held by Japan

US$214 billion: The amount by the UK

US$191 billion: The amount collectively held by Saudi Arabia, Venezuela and 13 other oil exporters

US$189.7 billion: Held by the Caribbean banking centres

US$139.8 billion: Held by Brazil

US$119.9 billion: Held by Russia

US$104.2 billion: Held by Luxembourg

US$99.8 billion: Held by Hong Kong

US$77 billion: Held by Taiwan


US$78 billion: Net Treasury debt bought by private foreign investors in June

US$22.5 billion: Net amount bought by foreign governments



US$16.9 billion: Net purchases of US equities by private foreign investors in June

US$2.2 billion: Net purchases by foreign governments



US$5.9 billion: Fannie Mae and other housing agency debt unloaded by foreign governments in June

US$103.1 billion: Amount sold in 12 months ending in June


US$82.8 billion: Net purchases of long-term U.S. securities in April-to-June quarter

US$81.8 billion: Trade deficit for April-June quarter - the amount by which the value of US imports exceeded the value of US exports.