U.S. Net Outflow of Long-Term Securities Rises to $37.3 Billion

Foreign sales of U.S. long-term securities outpaced U.S. purchases of such assets abroad in April as private investors overseas sold a record amount of Treasury bonds and notes, a government report showed.

The net long-term portfolio investment outflow for the month was $37.3 billion after a revised decline of $13.4 billion the prior month, the Treasury Department said in a statement today in Washington. U.S. residents bought a net $12.6 billion in foreign long-term securities, while investors abroad were net sellers of $24.8 billion of U.S. long-term securities, the report showed.

The report showed that investors may have been encouraged by a global economic recovery to take more risks. Cypriot President Nicos Anastasiades agreed on March 25 to a 10 billion-euro ($13.3 billion) loan from the euro area and the International Monetary Fund in return for measures including a tax on bank deposits of more than 100,000 euros at the country’s two biggest banks as well as wage and pension cuts and the sale of assets and gold.

“The successful resolution of the crisis in Cyprus helped to further support U.S. purchases of foreign assets, with lower yields continuing to drive buyers abroad in search for higher returns,” Gennadiy Goldberg, U.S. strategist at TD Securities Inc. in New York.

Including short-term securities such as stock swaps, the total cross-border inflow was $12.7 billion in April, compared with a $2.1 billion gain the prior month, the report showed.

Net selling of Treasury bonds and notes by private investors was a record $30.8 billion, the department said, while net sales by official entities of long-term Treasuries totaled $23.7 billion.

China stayed the biggest foreign owner of U.S. Treasuries in April even after its holdings fell $5.4 billion to $1.26 trillion, according to the Treasury. Japan, the second-largest holder, lowered its holdings by $14 billion to $1.1 trillion.

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