Editorial: Overseas Investors Still Like U.S. Debt

The upside is that against a backdrop of the nation’s ongoing budget turmoil, overseas investors still find United States’ debt an attractive bet. So attractive that foreign ownership of U.S. Treasury securities rose in October to a record level, $5.48 trillion, up 0.1 percent from September.

The downside, of course, is that the U.S. owes that astronomical amount of money to foreign investors.

Still, the $6 billion increase was the weakest since total holdings fell in December 2011. Economists say the slowdown in purchases of Treasury securities suggests investors are more willing to buy other debt, including from European governments, indicating fears of a financial catastrophe there are easing.

China, with holdings of $1.16 trillion, is the largest holder of U.S. government debt. Japan holds the second largest amount at $1.13 trillion, followed by Brazil at $255.2 billion.

And another debt ceiling crisis is looming as the nation is expected to hit its borrowing limit of $16.39 trillion by Monday. The last debt standoff prompted Standard & Poor’s to downgrade — for the first time ever — the government’s credit rating on long-term securities from the highest level of AAA to AA+.

Lawmakers should keep that in mind as they sort out the country’s financial situation.

This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.