Japan replaces China as largest foreign holder of US national debt

Japanese investors held US$1.12 trillion of US debt in June, as yields are higher than European and Japanese sovereign bonds

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(Source: pixabay)

(Source: pixabay)

TAIPEI (Taiwan News) – Japanese investors are holding the second most U.S. national debt, replacing China as the largest foreign creditor country.

According to the U.S. Department of the Treasury statistics, Japan’s share of U.S. national debt rose from US$1.10 trillion (NT$ 34.483 trillion) in May to US$1.12 trillion in June, the highest amount since October 2016.

China’s share of U.S. debt, on the other hand, rose slightly from US$1.11 trillion (NT$34.76 trillion) in May to US$1.11 trillion in June, making it the second largest foreign creditor.

Japan’s Ministry of Finance said Japanese investors bought in JP¥3 trillion (US$28.25 billion; NT$884.81 billion) mid- and long-term foreign bonds in June, among which over half were U.S. national debts. The trend is likely to continue into July.

Although the yield remains low on all forms of U.S. debt, they are still higher than the European and Japanese sovereign bonds, which show negative yields from time to time. Thus, U.S. sovereign bonds have become more attractive to Japanese investors, the Nikkei News explained.