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Foreign holdings of U.S. debt hit record high

By Martin Crutsinger

Associated Press

Published: Friday, June 15 2012 7:34 a.m. MDT

Foreign demand for U.S. Treasury securities rose to a record high in April. China, the largest buyer of Treasury debt, increased its holdings slightly after trimming them for two straight months.

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WASHINGTON — Foreign demand for U.S. Treasury securities rose to a record high in April. China, the largest buyer of Treasury debt, increased its holdings slightly after trimming them for two straight months.

The Treasury Department said Friday that total foreign holdings rose 0.4 percent to $5.16 trillion. It was the fourth consecutive monthly increase.

Demand for U.S. debt is rising largely because investors are worried about Europe's worsening debt crisis. U.S. government debt is considered one of the safest investments.

China boosted its holdings 0.1 percent to $1.15 trillion in April. That followed a 1 percent drop in March and a 0.9 percent decline in February. March's figures were revised down from the government's initial estimate a month ago that China had boosted its holdings in March.

Japan, the second-largest buyer of Treasury debt, trimmed its holdings 0.9 percent to $1.07 trillion. Brazil, the third-largest buyer of Treasury debt, boosted its holdings 5.3 percent to $246.7 billion.

Britain increased its holdings 26.5 percent to $154.2 billion while France increased its holdings by 29.4 percent to $59.4 billion. Germany, the largest economy in Europe, boosted its holdings of Treasury securities 1.5 percent to $65.6 billion.

Demand for Treasury securities has remained strong despite the first-ever downgrade of the government's debt last August. Standard & Poor's lowered its rating on long-term Treasury debt one notch from AAA to AA+ following a prolonged debate in Congress over increasing the nation's borrowing limit.

Last week, S&P reaffirmed that rating and said it was keeping a negative outlook on the rating for the future. S&P said U.S. political leaders were not addressing the federal debt burden. The rating agency predicted that the government's debt, as a percent of the economy, would rise from 77 percent in 2011 to 83 percent this year and 87 percent by 2016.

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