Foreign central banks' US debt holdings fall - Fed

NEW YORK, July 28 (Reuters) - Foreign central banks pared
their U.S. Treasuries and agency debt holdings in advance of
the Aug. 2 deadline when the U.S. government is expected to run
out of cash, data from the U.S. central bank showed on
Thursday.

The Fed said its holdings of U.S. securities kept for
overseas central banks fell by $3.31 billion in the week ended
July 27, to stand at $3.451 trillion.

The breakdown of custody holdings showed overseas central
banks' holdings of Treasury debt fell by $2.695 billion to
stand at $2.719 trillion.

Foreign institutions' holdings of securities issued or
guaranteed by the biggest U.S. mortgage financing agencies,
including Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), fell
by $610 million to stand at $731.96 billion.

If Washington fails to raise the statutory $14.3 trillion
debt ceiling by next Tuesday, it will likely cause the United
States to lose its AAA-rating, leading to downgrades on agency
debt and mortgage-backed securities.

Foreign investors own nearly 50 percent of publicly held
U.S. Treasuries.

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For balance sheet graphic: link.reuters.com/buf92k

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Overseas central banks, particularly those in Asia, have
been huge buyers of U.S. debt in recent years, and own over a
quarter of marketable Treasuries. China and Japan are the
biggest two foreign holders of Treasuries.

The full Fed report can be found on:
here
(Reporting by Wanfeng Zhou and Richard Leong; Editing by James
Dalgleish)