Foreigners net buyers of U.S. securities in April

Long-term purchases slip in April, still healthy
By @ibtimes on

NEW YORK, June 15 (Reuters) - Foreign investors reduced purchases of long-term U.S. securities in April but remained net buyers, while China raised its U.S. Treasury holdings for a second straight month, the Treasury Department said Tuesday.

Net long-term foreign purchases fell to $83 billion, compared with a record $140.5 billion in March. April's total was still the second highest in 2010.

Overseas investors had a healthy appetite for all manner of U.S. assets, with Treasuries, U.S. corporate bonds, equities and agency debt all attracting net inflows.

China remained the biggest single holder of Treasury debt, with $900.2 billion in its coffers as of April, up from $895.2 billion in March. Japan, the second largest Treasury holder, raised holdings to $795.5 billion from $784.9 billion.

Worries about a European debt crisis burnished the appeal of dollar-denominated assets, analysts said.

This is a strong report, and global investors are clearly choosing to overweight their U.S. holdings given deterioration in Europe and the fact that the U.S. economy is going to recover at a faster pace than Europe, said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.

While net long-term purchases fell compared to March, buying of agency and corporate bonds remained well above levels seen earlier this year and in late 2009, when both suffered sizable monthly net selling.

Overall net inflows, which include short-term securities such as Treasury bills, amounted to $15 billion in April, while March's tally was revised upward to $26 billion from an initial estimate of $10.5 billion.

Foreigners in late 2009 and early this year had been trimming holdings of short-term instruments. Inflows into short-dated securities is good news for the dollar, Woolfolk said.

China saw its stash of Treasury bills and other short-term debt rise to $42 billion in April. The country had in recent months been a net seller in this category as it let bills and other short-term holdings mature.

Elsewhere, the UK saw a surge in overall Treasury holdings to $321.2 billion in April from $279 billion in March.

(Reporting by Steven C. Johnson; Editing by Chizu Nomiyama)   

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