The U.S. Treasury has finally disclosed Saudi Arabia’s holdings of U.S. debt – after four decades of keeping it secret. And it’s enormous.
[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]he oil-rich nation was holding $116.8 billion in U.S. Treasuries as of March 2016, the Treasury Department disclosed this week. That ended its long-standing practice of group the sum with other countries ever since Treasury began supplying records on foreign ownership in 1974. Saudi Arabia’s holdings were not broken out individually, but grouped in with more than a dozen other states chiefly members of OPEC.
Investors for the first time can see the method by which the oil-rich country rankings in terms of owning U.S. government securities. Saudi Arabia acreages as the 13th biggest holder of U.S. treasuries only behind India at $118.9 billion and ahead of Singapore with $112.7 billion. Saudi Arabia’s holdings dipped 2.5% from the record $119.8 million the state held in February.
While the holdings of Saudi Arabia are critical, they’re smaller than what many had believed before, says CEO of bond direction firm Envision Capital Management, Marilyn Cohen. Saudi Arabia’s holdings fall nicely behind giants like China and Japan with holdings valued at $1.2 trillion and $1.1 trillion respectively. The fact Saudi Arabia is not even in the top 10 limits any potential fallout of the disclosure on the Treasury market, Cohen says.
Bond investors are left puzzling over why the Treasury Department would unexpectedly divulge this information after keeping it concealed for years, Cohen says. “There’s something political going on behind the drapes,” she says. “It must have been some kind of political push that may never be disclosed.”
[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]he Treasury holdings of Saudi Arabia were reported by Bloomberg News, which issued the info to be accessed by a Freedom of Information Act request. Saudi Arabia’s central bank has said it possessed nearly of $600 billion in U.S. Treasuries, Cohen says.
The disclosures reveal additional context about who owns U.S. Treasuries.
The disclosure of Saudi Arabia comes at a time when the country is trying to diversify away from its reliance on petroleum, Cohen says. “I do not think they’ll be happy with this” report’s release, she says. “Whether we hear anything about it, that’s the question.”
| Table 1. The Top 12 holders of US Treasuries | |
| State | Holdings in March 2016 ($ billions) |
| China | $1244.6 |
| Japan | $1137.1 |
| Cayman Islands | $265.0 |
| Ireland | $264.3 |
| Brazil | $246.4 |
| Switzerland | $230 |
| United Kingdom | $227.6 |
| Luxembourg | $221.3 |
| Hong Kong | $200.3 |
| Taiwan | $182.3 |
| Belgium | $153.8 |
| India | $118.9 |
| Saudi Arabia | $116.8 |
| Source: U.S. Treasury Department | |
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