Saudi Arabia raises US Treasury holdings to $142.5bn

Arabian Post Staff -Dubai

Saudi Arabia increased its holdings of US Treasury securities by about $2.2 billion in June, lifting the portfolio to $142.5 billion and extending the Kingdom’s position among the largest overseas investors in US government debt.
The June increase followed holdings of about $140.3 billion in May and left Saudi Arabia ranked 17th among foreign holders of Treasuries. The portfolio remained heavily weighted towards longer-dated securities, with $108.6 billion invested in long-term bonds and notes, equivalent to about 76% of the total. Short-term Treasury holdings stood at around $34 billion, accounting for the remaining 24%.

The rise came during a month in which overall foreign ownership of US Treasuries declined. Holdings by overseas investors fell to $9.299 trillion in June from $9.371 trillion in May, a drop of about $72 billion. Despite the monthly retreat, foreign holdings were 2.3% higher than a year earlier.

Saudi Arabia’s increase therefore contrasted with reductions recorded by several of the largest international holders. Japan remained the biggest non-US investor in Treasuries, although its holdings dropped 2.3% to $1.116 trillion from $1.143 trillion in May. The United Kingdom remained second with $939.9 billion, down from $948.6 billion.

China, the third-largest holder, reduced its Treasury portfolio by about 4% to $633.4 billion from $659.3 billion. That pushed its holdings to their lowest level since September 2008 and extended a longer-term decline in Beijing’s exposure to US government debt. China’s holdings were more than 13% lower than a year earlier.

Saudi Arabia’s Treasury portfolio has fluctuated sharply during 2026. Holdings stood at about $134.8 billion in January before jumping to around $160.4 billion in February, their highest level in roughly six years. The portfolio subsequently declined before stabilising around $140 billion in April and May and rising again in June.

The composition of the June portfolio indicates that Riyadh continued to favour longer-duration US government securities despite volatility in global bond markets. Longer-dated Treasuries generally offer higher yields than short-term bills but carry greater sensitivity to changes in interest rates, inflation expectations and fiscal conditions.

Foreign capital flows into US securities remained substantial even as Treasury ownership fell during the month. Overall net Treasury International Capital inflows reached $133.5 billion in June. Net foreign purchases of long-term US securities totalled $207.1 billion, including $169.8 billion from private investors and $37.3 billion from official institutions.

Demand was uneven across asset classes. Private foreign investors bought a net $16.6 billion of Treasury bonds and notes in June, substantially below the $53.6 billion recorded in May. Foreign official institutions were net sellers of $9.8 billion of Treasury bonds and notes.

By contrast, overseas investors continued to channel large sums into US equities. Private foreign purchases of equities reached $144.7 billion during June, while official institutions bought another $36.7 billion. Foreign investors also reduced their holdings of US Treasury bills by $29 billion during the month.

The divergence highlights an increasingly selective approach among international investors towards US assets. Demand for equities has remained strong, while purchases of government bonds have become more sensitive to interest-rate expectations, inflation risks, fiscal deficits and movements in the dollar.

Saudi Arabia’s Treasury holdings form part of a broader portfolio of overseas financial assets accumulated through decades of energy exports and reserve management. US government securities provide deep liquidity and remain an important destination for dollar-denominated reserves, even as Riyadh expands investments through the Public Investment Fund and other state-controlled entities.

The June figures also underscore Saudi Arabia’s continuing financial links with the United States at a time when the Kingdom is pursuing greater diversification in trade, investment and reserve management. Its Treasury position remains far below those of Japan, the UK and China but places Riyadh among the significant sovereign holders of US government securities.