Saudi Arabia is pumping profits from this year's oil rally into U.S. bonds even as worsening public finances in the world's largest economy prompt China, the biggest holder of Treasuries, to slow purchases.
The Saudi Arabian Monetary Agency's holdings of foreign securities rose 12 percent this year to a record 1.32 trillion riyals ($350 billion) as of June 30, central bank data show. HSBC Holdings Plc estimates a 'large proportion' of those investments are in Treasuries. China's ownership of such debt was $1.16 trillion as of May 31, unchanged from the end of 2010, U.S. government data show.
'Where else would they put their money?' Jarmo Kotilaine, chief economist at Jeddah, Saudi Arabia-based National Commercial Bank, said in an interview. 'The only pool of truly liquid securities is the U.S.'
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