Foreign demand for US Treasury debt rose to a record high in January, with China, the largest buyer of Treasury debt, increasing its holdings for the first time in six months.

Total foreign holdings rose 0.9 percent in January to US$5.05 trillion, the sixth straight monthly rise, the US Treasury Department said yesterday.

China boosted its holdings 0.7 percent to US$1.16 trillion. Japan, the second-largest buyer of Treasury debt, lifted its holdings 2 percent to a record US$1.08 trillion.

US government debt is viewed as one of the safest investments. Demand for it has risen as Europe's debt problems have intensified.

The demand has remained strong despite the first-ever downgrade of the government's credit rating in August. Standard & Poor's lowered its rating on long-term Treasury debt one notch from AAA to AA+ following a prolonged debate in Congress over raising the nation's borrowing limit.

The nation's borrowing needs will remain high based on projections of future deficits. The Congressional Budget Office on Tuesday released a new estimate that the government will run a US$1.2 trillion deficit for the current budget year, which ends on September 30. That would mark the nation's fourth straight trillion dollar-plus deficit.

In the report, Britain, the third-largest holder of Treasury debt, had a 26.6 percent increase in its holdings to US$142.3 billion. However, much of that gain probably reflected purchases of Treasury securities that were made by British banks for investors in other countries.