Foreigners interest in Australian government debt has ticked up again

(Photo: Brian de Rivera Simon/Getty Images

Non-resident holding of Australian government securities climbed for the first time in 11 quarters.

Foreigners held 55.4% of the $530.8 billion in outstanding government securities as at March 31, according to data released by the government’s funding agency Australian Office of Financial Management. That compared with 54.9% in December.

These two charts from the AOFM depict the rise in foreign interest

Rising interest dovetails with surging demand for Australia’s bond sales this year. Bids for government bonds at auctions has risen to the highest level in 12 years, as the government’s planned issuance of new debt has more than halved.

At auctions this year investors have submitted bids to buy an average 4.12 times the amount of debt the government has had on offer, the highest level since 2005. That compares with 2.89% last year, the lowest level since 2002.

Australian government bonds are typically favoured by foreigners due to the highest credit rating the nation enjoys and the extra yield it offers over other developed markets.

Aussie 10-year bonds yielded 2.39% on Tuesday. The yield premium the nation’s benchmark bonds offer over their US peers stood at 22 basis points up from 16 basis points last month, the narrowest since 2001.

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