Cayman purchased 48.8 billion in US Bonds in Feb, the highest globally | Loop Cayman Islands

The content originally appeared on: Cayman Compass

The US Department of Treasury publishes data files of the Treasury International Capital (TIC) reporting system, which provides information on capital movements between the United States and foreign countries. The latest available TIC data, as of February 2022, shows that the Cayman Islands are major foreign holders of US treasuries and ranked high amongst the net purchases of US long-term securities.

In terms of rankings of foreign countries as of February 2022, the Cayman Islands held the number seven spot with 277.4 billion dollars of US Treasuries, more than France at 239.6 billion, Canada at 208.1 billion, Hong Kong at 205.9 billion and The Bahamas at 33.5 billion. At the top were Japan with 1,306.3 billion, China with 1,054.8 billion, United Kingdom with 625.2 billion and Ireland with 314.8 billion.

In terms of new net purchases of US long-term securities, the TIC data shows a monthly breakdown of net transactions in long-term US Treasury securities by sector, including net purchases by foreign official institutions, by international and regional organizations and by other private foreigners. Regarding this, the total net purchases of Treasury Bonds and Notes by foreigners were 75.3 billion dollars, with the Cayman Islands taking the number one spot (in terms of net figures) with 48.8 billion dollars, which easily dwarfed most countries, other than the UK which followed closely behind the Cayman Islands.

As to the reason that foreign investors may have purchased US Treasury Bonds in February 2022, it is possible that they considered US Treasury Bonds as a safe financial instrument because the US government would probably not default on any of its US Treasury Bond obligations. There is some speculation, however, regarding the timing of the purchases in February 2022, which coincides with the start of Russia-Ukraine war in the same month. Considering the impending conflict in February 2022 and subsequent market volatility, it is possible that some investors (hopefully, not Russian sanctioned persons) may have found US Treasury Bonds to be a safe bet, purchasing them for the first time or increasing their holdings.