The main explanation has been the large accumulation of Australian public sector debt by foreigners, including by central banks and other public sector asset managers. Central banks increased their allocation to Australia in their foreign reserves portfolios in the aftermath of the global financial crisis.
Foreign ownership of Australian Government bonds increased from around 40 per cent in the early 2000s, peaking at nearly 80 per cent in 2012 (Graph 4). [3] At the same time, the size of the Australian Government bond market grew significantly.