The story points to worries about the willingness of large foreign institutions to keep holding US Treasury debt. Total US debt stands at around $36.22 trillion.

Hong Kong’s pension fund managers are starting to consider selling US Treasury holdings as soon as three months from now if the US loses its last recognised top credit rating, Bloomberg reported, citing unnamed sources.

Industry groups, including the Hong Kong Investment Funds Association and the Hong Kong Trustees’ Association, discussed the proposal with the pensions regulator yesterday, the news service said. 

Local rules mean that managers of the city’s HK$1.3 trillion ($166 billion) Mandatory Provident Fund system can only invest more than 10 per cent of their funds in Treasuries if the US has an AAA or equivalent rating from an approved agency.

In May, Moody’s Ratings cut US sovereign debt score. The report said London Stock Exchange Group’s FTSE Russell, which runs the MPF World Government Bond Index, a benchmark that pension fund managers use widely for exposure to Treasuries, has analysed the divestment plan at the request of the industry groups.

The report said that representatives from the MPF Schemes Authority and FTSE Russell declined to comment. The Hong Kong Investment Funds Association didn’t respond to a request for comment.

At a time when the US is at odds with mainland China and much of Asia over tariffs, with concerns rising about large US public debt, there are worries about whether foreign investors will retain a desire to hold US debt, once seen as a safe haven. Fears have also been fuelled by the US Republicans’ “Big Beautiful Bill” tax plan and its impact on the budget deficit, and hence stock of debt. The total US national debt, as of June 2025, is approximately $36.22 trillion.

The Bloomberg article noted that there are unusually strict investment mandates governed by Hong Kong regulations. Most global investors don’t require the top-tier rating to invest freely in US Treasuries.