Revealed: Saudi Arabia owns $117 billion of U.S. debt
NEW YORK – One of the biggest mysteries in global finance was just revealed: How much U.S. debt Saudi Arabia owns.
Saudi Arabia stockpiled $116.8 billion of U.S. Treasuries as of March, a person familiar with the matter confirmed to CNNMoney on Monday.
That makes Saudi Arabia one of the top dozen or so foreign holders of U.S. debt, though well behind the $1 trillion-plus owned by China and Japan each.
Unlike with most other major owners of U.S. debt, the Treasury Department kept Saudi Arabia’s precise holdings secret since the 1970s. Saudi’s holdings were lumped together with that of other oil exporting nations, including Venezuela and Iraq.
The Saudi figure was first reported by Bloomberg News based on a Freedom of Information Act request.
The Treasury Department confirmed to CNNMoney that later on Monday it will provide new information on specific countries in its report on foreign ownership of U.S. debt. A Treasury official cited a recent review that was aimed at trying to provide more “comprehensive and transparent” data.
It is possible that Saudi Arabia owns even more U.S. debt than what was revealed on Monday. That’s because Saudi Arabia’s central bank listed owning $587 billion of foreign reserves as of March. Typically, central banks park the majority of their foreign reserves in U.S. Treasuries. In other words, the numbers don’t really add up.
One possibility: Saudi Arabia could be taking a page out of China’s playbook. Many analysts believe China owns U.S. debt through custodial accounts in Belgium, a relatively tiny country that listed owning over $140 billion of U.S. Treasuries as of February.
The mystery had taken on greater significance in recent months. Since the end of 2014 the Saudis have burned through more than $130 billion of foreign-exchange reserves — almost definitely including U.S. debt — to help cope with the crash in oil prices.
Additionally, rising tensions between the U.S. and Saudi Arabia led the kingdom to make a recent shocking threat. Sources told CNN in April that Saudi Arabia threatened to sell off American assets if Congress passed a bill that would allow 9/11 victims to sue foreign governments. A Saudi source at the time told CNNMoney that the kingdom was “serious” about this threat.
Dumping a vast sum of U.S. Treasuries at once could cause the securities to tank, potentially destabilizing global financial markets. It could also severely hurt Saudi Arabia’s own finances, leading many experts to conclude the threat was empty.
By Matt Egan, CNNMoney