Does Saudi Arabia Have $750 Billion In Assets To Sell?

As we reported over the weekend, based on NYT info, the Saudi finance minister said the kingdom would sell up to $750 billion in Treasury securities and other assets if Congress passed a bill that would allow the Saudi government to be held responsible for any role in the September 11, 2001 terror attacks. Senators Chuck Schumer of New York and John Cornyn of Texas introduced the "Justice Against Sponsors of Terrorism Act (JASTA) last fall, but the legislation seemed to gain some new traction after a related segment on 60 Minutes earlier this month.

The punchline, of course, was that Saudi officials indicated they would sell its dollar-denominated assets if the law passed to avoid having those assets frozen by American courts.

But does Saudi Arabia even have $750 billion of assets to sell?

For the answer we go to Stone McCarthy who note that while they can't answer that question definitively - recall that the exact amount of Saudi Treasury holdings remains a mystery as it is not broken out separately - here's what they do know from the Treasury International Capital (TIC) data.

First, the Treasury doesn't specifically report Saudi Arabia's holdings of U.S. securities. Instead, Saudi Arabia's holdings are combined with the holdings of the following countries into a category called Asian exporters: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar and United Arab Emirates.

 

At the end of January, Asian oil exporters held $563.6 billion of U.S. securities, with Treasuries and U.S. equities accounting for 92.2% of the total. Treasury holdings totaled $268.2 billion.

 

 

These figures reflect holdings that Treasury can directly attribute to the Asian oil exporting countries. Regular readers of our updates on the TIC data know that foreign investors often hold securities at custodial institutions in other countries. For example, in February, the five major custodial centers held $1.1 trillion of Treasury securities. It's possible that Saudi Arabia has holdings of securities parked in custodial accounts, but there's no way to know that for sure from the TIC data.

 

Also keep in mind that as we have previously reported, the Saudis were said to have been one of the most aggressive sellers of US-denominated assets in late 2015 and early 2016 to fund the country's budget deficit as Petrodollar revenues collapsed.

So, in short, the answer is nobody knows for sure, but if the Saudis did have $750 billion several months ago, they probably have far less as of this moment.