Ireland Stands Out in Treasury Holdings That Exceed Economy

  • Investors in the nation owned $264.3 billion as of March
  • U.S. revises figures to show Caribbean, OPEC holdings

Deep Dive: Foreign Holdings of U.S. Treasuries Climb

Ireland emerged as America’s fourth-largest creditor following China, Japan and the Cayman Islands after the U.S. government revised the way it reports the figures.

Investors in the European nation owned $264.3 billion of Treasuries at the end of March, based on official data issued Monday -- less than $1 billion off a record high of $265.1 billion in December. China is the biggest holder of the U.S. bonds with a $1.24 trillion stake. Japan is next with $1.14 trillion, followed by the Cayman Islands with $265 billion.

Ireland’s holdings are bigger than the size of its economy, which is worth about $230 billion for a population of less than five million. One potential explanation is the large number of fund managers and other companies based in the country for its tax incentives.

“It’s all just foreign banks, funds and corporates based here,” said Owen Callan, a fixed-income analyst at Cantor Fitzgerald LP in Dublin. “It’s probably linked to offshore mutual funds administered here or offshore-retained earnings of U.S. multinationals.”

More than 700 U.S. companies are domiciled in Ireland, employing 140,000 people, according to the American Chamber of Commerce. And of the $1.62 trillion held by global funds administered in the nation, $337 billion is in government bonds including Treasuries, data from the Bank of Ireland show.

Ireland’s corporate tax rate is 12.5 percent, compared with a global average of about 24 percent, according to audit firm KPMG LLP. In the U.S., the rate can be as high as about 40 percent.

Related: U.S. Discloses Saudi Holdings of Treasuries for First Time

The Treasury Department released details of the bond holdings among the countries in OPEC and the Caribbean, dropping its practice of grouping them together, in response to a Freedom-of-Information Act request submitted by Bloomberg News. Analysts track overseas demand for Treasuries because investors from outside the U.S. own 47 percent of the $13.4 trillion debt market, the biggest in the world.

“We recently undertook a thorough data and legal analysis to determine if we could report data in a more comprehensive and transparent fashion,” said Whitney Smith, a spokeswoman for the Treasury Department. “We concluded that it was consistent with transparency and the law to disclose the data in a disaggregated fashion.”

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