Business Essentials for Professionals


$265 Billion in Treasuries is Held at the Tiny Cayman Island

$265 Billion in Treasuries is Held at the Tiny Cayman Island
The third biggest foreign owner of U.S. government debt is a Caribbean financial center that is favored by hedge funds.
According to data the U.S. Treasury Department released very recently, the Cayman Islands held $265 billion of Treasuries as of March, up 31 percent from a year earlier. The Cayman Island is home to more hedge funds than anywhere else in the world. Details of bond holdings among OPEC and Caribbean countries by the US Treasury came in response to a Freedom-of-Information Act request submitted by Bloomberg News and this is the first time that such data has been made public
The largest holder after China and Japan is the Cayman Islands which is also known as an offshore tax haven with about 60,000 residents. More than $1 trillion of Treasuries is owned by each China and Japan, the world’s second- and third-biggest economies.
Hedge funds are joining more traditional mutual fund managers in buying Treasuries because of lackluster returns in other assets and this is exhibited by the surge in ownership of U.S. debt for the Caribbean getaway. Asset managers are being pushed into the $13.4 trillion Treasuries market due to negative bond yields in Europe and Japan. The Treasuries market is on pace to gain for a third consecutive year.
“Most hedge funds are using Treasuries as a way to park assets without taking a lot of risk,” said Donald Steinbrugge, managing partner of hedge-fund consulting firm Agecroft Partners in Richmond, Virginia.
According to a 2014 report  by consulting firm Oliver Wyman & Co, about 60 percent of the world’s hedge-fund assets are domiciled in the Cayman Islands.
"A robust regulatory regime and no or low entity-level taxation allowed the Cayman Islands to build a long-lasting reputation as a global hedge funds hub," according to the report.
An e-mail and phone call to the public relations division of the Cayman Islands Monetary Authority weren’t immediately returned.
However, the critical mention of the Cayman Islands have been termed as "absolutely wrong" by the head of the Cayman Islands' main finance organization.
Publication of the ultimate beneficial owners of businesses in offshore centres would not be effective, said Jude Scott, the head of Cayman Finance which is part funded by the islands' government.
The comment had been made in response to new rules on revealing foreign owners of property in Britain and a crackdown on businesses that fail to tackle fraud by the British Prime Minister David Cameron.
Jude Scott said that critics of the Cayman Islands and other overseas territories were mistaken.
"There's an element of privacy that we should expect when we are doing legitimate transactions - much as if we go to our bank and we do a transaction. There is an expectation that won't be made public and I think those are reasonable expectations. If we do breach laws then of course we should expect that our information is going to be provided to appropriate authorities," he said.
( &

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc