Foreign ownership of US debt falls for 1st time in 6 months

WASHINGTON – Foreign holdings of U.S. 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 U.S. debt.

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

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

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

The national debt is more than $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, $13.7 trillion is publicly traded on financial markets and $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, $4.1 trillion is held by foreign governments, primarily central banks, who see Treasury securities as one of the world’s safest investments.