China Keeps Faith in U.S. Bonds Even as It Sells Treasurys

(Bloomberg) — China may be selling down its massive pile of Treasurys but only in favor of other U.S. government debt.

Investors in the Asian nation offloaded $12.6 billion of Treasurys last year, according to the latest data from the U.S. Treasury Department, but that figure was dwarfed by a record $121.8 billion purchase of agency debt, higher-yielding securities still backed by the U.S. government.

U.S. agency bonds, including those of home-mortgage behemoths Fannie Mae and Freddie Mac, currently offer a yield premium of 28 basis points over Treasurys, according to a Bloomberg index.