China may back away from US Treasuries

China, one of the biggest foreign holders of US Treasuries, may be reluctant to invest further after the bailout of Freddie Mac and Fannie Mae.

China may show some reluctance towards investing further in US Treasury bonds after the bailout of the troubled mortgage finance giants Freddie Mac and Fannie Mae, say debt market experts.

Last weekend the US government announced a takeover of the two large mortgage financers. The expected move will inject much needed capital into the troubled institutions, diluting shareholdersÆ equity but offering bondholders the explicit backing of the American government.

A sovereign bond analyst says China, which is a large holder...

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