In this article, we will be analyzing the foreign-owned US debt during prevailing global conditions, while covering the top 20 countries that own the most US debt. If you wish to skip our detailed analysis, you can move directly to the Top 5 Countries that Own the Most US Debt.

Foreign-Owned US Debt: An Overview

The US government owes money to governments, central banks, companies, and individual investors around the world.  As reported by the US Department of the Treasury, the US owes a total of $7.4 trillion in Treasury securities to foreign countries. Foreign countries buy US Treasury securities since they are considered as one of the most secure assets. Among other countries, Japan and China have continued to be the top holders of US debt during the last two decades. Since the dollar is a strong currency that is accepted globally, holding a substantial amount of US debt can be beneficial. Furthermore, these securities also give a higher rate of return relative to other government bonds.

During the pandemic, the US foreign-owned debt declined as both official and private sector foreign investors contributed $417 billion of net sales in the U.S. Treasury securities in March 2020. Since the pandemic created a demand for more liquid capital assets, private investors ended up selling longer-term US Treasury notes and bonds. The crisis also made Saudi Arabia, China, and Brazil sell their shares of US Treasurys for short-term capital. You can also take a look at some of the countries with the most debt.

Global Scenario Amidst Rising Interest Rates

On October 10, the IMF reported that central banks around the world are keeping interest rates high in an attempt to tame inflation. This tight monetary policy is making debt expensive for borrowers which could even lead to defaults. Low-income economies are facing trouble with borrowing in hard currencies like the euro, yen, US dollar, and UK pound. Government bonds in emerging economies are also being issued at higher interest rates. This is impacting the corporate side of the world as well. Companies in both advanced and emerging market economies are struggling to pay their interest expenses. The situation is even grim for financially weaker firms who borrow from the leveraged loan market since defaults have been increasing. Countries with the most external debt have also been previously covered.

On the contrary, sectors that generally benefit from rising interest rates include financial and brokerage firms since their profit margins tend to expand in this case. Some of these include The Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), and Goldman Sachs Group, Inc. (NYSE:GS). Let’s look at what these firms have been up to.

The Bank of America Corporation (NYSE:BAC) is a multinational investment bank and financial services holding company. It is one of the largest banking institutions in the world. On October 17, the Bank of America Corporation (NYSE:BAC) reported earnings for the fiscal third quarter of 2023. The company reported earnings per share of $0.90, beating EPS estimates by $0.08. Revenue for the quarter amounted to $25.17 billion, up 2.71% year-over-year and ahead of revenue consensus by $93.31 million.

JPMorgan Chase & Co. (NYSE:JPM) is a leading American multinational financial services company that serves worldwide. The company has recently forecasted positive growth prospects for its payments business. On November 15, Bloomberg reported that the digital token JPM Coin has been expected to make $10 billion in daily transactions in the coming year. JPMorgan Chase & Co.’s (NYSE:JPM) Global Head of Financial Institution Payments is hopeful regarding a substantial growth in daily transactions over time.

Goldman Sachs Group, Inc. (NYSE:GS) offers services related to investment banking, prime brokerage, asset management, and wealth management. On November 15, the company announced the latest fund launched through the Goldman Sachs ETF Accelerator with the listing of the first exchange-traded fund by GMO, a global investment manager. Leveraging the potential of the rapidly growing ETF industry, the Goldman Sachs ETF Accelerator business enables clients to launch, list, and manage their ETFs. On October 17, Goldman Sachs Group, Inc. (NYSE:GS) reported its financial results for the fiscal third quarter of 2023 that exceeded analysts’ estimates on stronger-than-expected trading revenue. The decline in trading of currencies, commodities, and credit was balanced out by strength in interest rate products and mortgages. The group reported earnings per share of $5.47 and generated a revenue of $11.82 billion, outperforming revenue consensus by $685.36 million.

Similarly, you can also consider several other best investments during high interest rates.

Our Methodology:

We acquired data from the US Department of Treasury which issues information related to the major foreign holders of US treasury securities. The most recent data is available from January 2023. Hence, we used the total debt held by each of the countries as our metric and ranked the countries in ascending order of the total US debt held.

20. Bermuda                      

Total Debt Held: $77.4 Billion

As of January, Bermuda ranks as one of those that own the most US debt. The government of Bermuda is trying to move towards an overall budget surplus and a reduction in the national debt.

19. Germany                      

Total Debt Held: $91.3 Billion

Germany is another country in Europe that owns the most US debt.

18. Norway                      

Total Debt Held: $104.4 Billion

Norway is another major US debt holder from Europe. As of January, Norway owns US debt worth $104.4 billion. Thus, Norway ranks as one of the countries that own the most US debt.

17. Korea                       

Total Debt Held: $105.8 Billion

The 20 countries that own the most US debt include Korea as well. As of January, the country owns a total of $105.8 billion of US debt. Korea’s external debt has also been increasing in recent years.

16. Saudi Arabia               

Total Debt Held: $111 Billion

Saudi Arabia owed $111 billion to the United States thereby qualifying as one of the top 20 countries that own the most US debt. However, the country sold over $3 billion of US government debt in June since it is investing more in riskier assets.

15. France                      

Total Debt Held: $183.9 Billion

France is another nation that owns the most US debt.

14. Singapore                   

Total Debt Held: $187.6 Billion

The total amount owed by Singapore to the US is $187.6 billion. This ranks the country among those who own the most US debt. The sovereign debt per capita is also high in Singapore.

13. Brazil                      

Total Debt Held: $214 Billion

Following the United States, Brazil is one of the largest economies in the Western Hemisphere. As of January, Brazil owns a total of $214 billion worth of US debt.

12. Hong Kong                   

Total Debt Held: $226.8 Billion

Hong Kong ranks as another top nation that has borrowed money from the US. As of January, the nation owed $226.8 billion to the US. Hong Kong has pegged its currency to the US dollar which is supported by this debt.

11. India                       

Total Debt Held: $232 Billion

India owns $232 billion worth of US debt, as of January. This makes the country qualify as one of the top 20 countries that own the most US debt. The US treasury securities are deemed as a safe investment for the country.

10. Taiwan                       

Total Debt Held: $234.6 Billion

Taiwan has a large trade surplus with the US. It is also a major US debt holder since it owns $234.6 billion worth of treasury securities, as of January. This ranks Taiwan as one of the top 20 countries that own the most US debt.

9. Ireland                     

Total Debt Held: $253.4 Billion

As of January, Ireland owns $253.4 billion worth of US treasury securities. Ireland is also a known destination for investment by US companies due to its favorable business environment.

8. Canada               

Total Debt Held: $254.1 Billion

Based on shared geography and economic ties, Canada is one of the closest allies to the US. The country owns $254.1 billion worth of US treasury securities, as of January. This makes it another major US debt holder.

7. Cayman Islands              

Total Debt Held: $285.3 Billion

The Cayman Islands is a relatively smaller country that owns $285.3 billion worth of US treasury securities. This ranks the country among other nations that own the most US debt. Furthermore, there are numerous domiciled investment firms in the Cayman Islands that invest in US debt.

6. Switzerland

Total Debt Held: $290.5 Billion

With a debt of $290.5 billion, Switzerland ranks as one of the top countries that own the most US debt. Investors in Switzerland have also increased their holdings of US debt. The country’s other main creditors include countries such as Germany and France.

Click to continue reading and see Top 5 Countries that Own the Most US Debt.

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Disclosure: None. Top 20 Countries that Own the Most US Debt is originally published on Insider Monkey.