At a time when foreign residents decreased their holdings of long-term US securities, India has became the 12th largest holder of US government securities at the end of 2016, with exposure worth $ 118.2 billion, as compared to $116.8 billion for the previous year. However, in December 2016, the country’s exposure stood slightly lower than previous month November 2016.
As per the US Treasury Department latest data, Japan remained the largest holder of government securities, with holdings worth $ 1.09 trillion, followed by China with securities to the tune of $ 1.06 trillion and Ireland was at the third place with holdings worth $ 288.2 billion. Among the BRIC, a group of five nations-Brazil, Russia, India, China and South Africa, India is at the third place after China and Brazil in terms of exposure, while Russia held American government securities worth $86.1 billion in December 2016.
Other nations having more holdings than India were Luxembourg ($ 223.4 billion), United Kingdom ($ 217.1 billion), Hong Kong ($ 191.4 billion), Taiwan ($ 189.3 billion) and Belgium ($ 120.4 billion). The data reflects foreign holdings of US securities collected primarily on the basis of custodial data. Foreign residents decreased their holdings of long-term US securities in December with net sales of $ 13.9 billion.
In general, the data reflects foreign holdings of US securities collected primarily on the basis of custodial data.
“Foreign residents decreased their holdings of long-term US securities in December; net sales were $13.9 billion. Net sales by private foreign investors were $32 billion, while net purchases by foreign official institutions were $18.1 billion,” the Treasury Department said in a release on February 16.
What is Government bond?
- A government bond is a bond issued by a national government, generally with a promise to pay periodic interest payments and to repay the face value on the maturity date.
- Government bonds are usually denominated in the country’s own currency. Government bonds are sometimes referred to as “‘sovereign bonds”‘. If a government or sovereign is close to default on its debt the media often refer to this as a sovereign debt crisis.
- The terms on which a government can sell bonds depend on how creditworthy the market considers it to be. International credit rating agencies will provide ratings for the bonds, but market participants will make up their own estimates about these bonds.
About United States Treasury security
- United States Treasury securities are government debt instruments issued by the United States Department of the Treasury to finance the national debt of the United States. Treasury securities are often referred to simply as Treasuries.
- Since 2012 the management of government debt has been arranged by the Bureau of the Fiscal Service, succeeding the Bureau of the Public Debt.
- There are four types of marketable treasury securities: Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation Protected Securities (TIPS). There are also several types of non-marketable treasury securities including State and Local Government Series (SLGS), Government Account Series debt issued to government-managed trust funds, and savings bonds.
- All of the marketable Treasury securities are very liquid and are heavily traded on the secondary market. The non-marketable securities (such as savings bonds) are issued to subscribers and cannot be transferred through market sales.
- U.S. Treasury securities – or “Treasuries” – are generally considered the safest of all investments. They are viewed in the market as having virtually no “credit risk,” meaning that it is highly probable your interest and principal will be paid fully and on time.
- Federal Reserve Banks are required to hold collateral equal in value to the Federal Reserve notes that the Federal Reserve Bank puts into circulation. This collateral is chiefly held in the form of U.S. Treasury debt and government-sponsored enterprise securities.