11 September 2026
The world’s benchmark borrower is also its biggest external debtor. Bond investors have long treated that as America’s privilege. They may come to treat it as a reason to buy something else.
China has now tested the point twice. Its $2bn sale in Riyadh in November 2024 drew orders twenty times the amount on offer, pricing three-year debt a single basis point above Treasuries and five-year at three; the paper was soon trading some 30 basis points inside the curve. A second issue last November priced the three-year at zero and the five-year at two, and by the following morning the 2028s were 33.5bp through and the 2030s 37.5bp. This is not an anomaly that has faded.
Nor is it a verdict on American creditworthiness. Chinese dollar supply is scarce, the bonds are closely held by central banks and by Asian banks hungry for dollar assets, and the tax treatment helps. Technical factors explain most of it. But it raises a question dollar investors have not had to ask for forty years: how much extra yield should they demand from countries whose external balance sheets are stronger than America’s?
At the end of March 2026, US overseas liabilities exceeded foreign assets by $21.27tn, roughly two-thirds of GDP. Germany, China, Japan, Hong Kong, Norway and Taiwan together held about $18tn of net foreign assets at the end of 2025. The six largest creditors combined do not match the American debtor position.
The reversal is recent. The United States was a net creditor until 1986, when its position turned negative for the first time since 1914, at $107bn. Four decades on, that deficit is two hundred times larger and the borrowing costs are still the lowest in the market.
National wealth is not government wealth. Assets held by companies and households are not available to repay sovereign bonds. But a large external cushion alongside modest public debt is a genuine anchor, and a firmer one than the Treasury’s own trajectory: between March 2025 and February 2026 the Congressional Budget Office raised its projection for 2055 federal debt from 156 to 172 per cent of GDP.
Treasuries earn their premium. They trade freely, serve as collateral everywhere and are favoured by bank regulation, and Washington borrows in dollars it can create. Those advantages justify a premium. They do not establish that today’s premium is the right one, or that it survives unchanged as American indebtedness compounds. Emerging-market spreads look tight against their own history, but that history was formed when the United States was still a net creditor.
The opportunity is therefore selective. It lies in creditor sovereigns with manageable public debt, not in emerging markets indiscriminately. Egypt and Argentina do not belong in the proposition.
Neither does a dollar crisis. Reserve managers can diversify gradually; Asian pension funds and insurers can outgrow their domestic markets; Gulf investors can steer surpluses towards balance sheets resembling their own. Dollar-based investors can keep the currency exposure while moving credit exposure from the world’s largest debtor towards its strongest creditors. None of that displaces Treasuries from the centre of global finance. It merely narrows the distance.
America can remain indispensable while becoming less attractive at the margin. Investors need not predict the end of the dollar to question the price of its privileges. They need only recognise that the country underwriting the world’s safest asset is no longer the world’s safest balance sheet.