Foreign holdings of Treasury debt rose in August

AP News
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Posted: Oct 18, 2011 9:46 AM
Foreign holdings of Treasury debt rose in August

Overseas buyers of U.S. Treasury debt stepped up their purchases in August after two months of declines. Foreign holdings increased after lawmakers in Washington ended a fight over raising the government's borrowing limit.

The Treasury Department reported Tuesday that total holdings rose 2 percent to $4.57 trillion, following the first decreases since April 2009. Japan and Britain, two of the three largest buyers of U.S. Treasury debt, both boosted their holdings.

But China, the largest foreign buyer, cut its holdings 3.1 percent to $1.14 trillion.

Congress and the Obama administration reached a deal on Aug. 2 to increase the nation's borrowing limit by more than $2 trillion, just hours before the U.S. faced a potential default on its debt. Days after that deal was reached, Standard & Poor's downgraded the credit rating on long-term U.S. debt one notch from AAA to AA+.

The decline in China's holdings was the first decrease for that country since a 0.8 percent decline in February.

Japan, the second-largest buyer of Treasury debt, increased its holdings 2.4 percent to $936.6 billion while Britain, the third-largest buyer, boosted its holdings 12.4 percent to $397.2 billion.

The 2 percent rise in overall holdings came from a big 6.5 percent rise in holdings of private investors. Holdings by foreign governments were up a much smaller 0.2 percent in August. Foreign holdings, primarily by central banks, represent 70 percent of total foreign ownership of U.S. Treasury securities.

Net purchases of long-term securities, a category that includes not only U.S. government but also bonds sold by U.S. companies, increased by $57.9 billion in August, the biggest monthly gain since a rise of $61.3 billion in December 2010.