Foreign holdings of Australian government bonds may have peaked for now, as a rash of new issuance, price volatility and emerging market sales to defend sinking or pegged currencies contains interest in new issuance, according to experts.
They say the surge in demand for Australian paper following the global financial crisis may have settled, partly explaining a drop in the proportion of outstanding debt held by foreign central banks and other investors to about 66 per cent at the end of   June this year, from a 2012 peak of about 76 per cent.
This ratio is calculated according to market value, meaning it naturally falls when prices drop and yields rise. 
This, added to heavy new issuance by the federal government to finance the country's widening budget deficit, and the completion of allocation targets by foreign central banks as part of their diversification out of low-yielding US Treasuries, has weighed on the ratio of overseas to domestic buyers.
According to the Australian Office of Financial Management (AOFM), which issues debt on behalf of the Commonwealth, the value of bonds held by foreign central banks and other public and private sector entities was about $265 billion at the end of   June, from a total of just under $400 billion at market prices.
This compares with about $183 billion out of a total of around $240 billion at its proportional peak in early 2012.
"It's not not that overseas investors have been selling the bonds," said UBS Global Asset Management portfolio manager Tim van Klaveren.
"It's just that the AOFM has been issuing a lot of new debt and as a percentage, offshore buyers have been buying less than they have in the past," he said.
Asian central banks, including the People's Bank of China, became huge buyers of Australian sovereign debt in the fallout of the global financial crisis, when the world's main economies were forced to slash short-term interest rates and buy bonds to hold down long-term rates.
This coincided with heavy issuance in Australia. The Rudd government raised debt to finance stimulus spending, then successive governments financed a widening budget deficit.
Market sources say central banks from about 100 countries now own Australian government debt compared with about half a dozen in 2008, although China, Korea, Singapore, Indonesia and Malaysia continue to dominate.
Japanese buyers tend to come from the private sector.
Overnight lending rates in Europe, Japan and the United States are still at or close to zero, more than six years after extreme easing was introduced.
Until about a year ago, Australia's rates and the local currency were high relative to this global trend, drawing billions of dollars of foreign investment into not only bonds but equities, property and the Australian dollar.
This trend only began to reverse about a year ago, when the US Federal Reserve ended quantitative easing and signalled an eventual start to monetary tightening, driving up the greenback and narrowing the spread between US and Australian interest rates.
"These portfolios were built up to diversify away from US dollar holdings, as we were going through quantitative easing one, two and three," said government bond fund manager Charlie Jamieson from Jamieson Cootes Bonds in Melbourne.
"This is pretty much a mature theme in the markets right now, so the amount of buying naturally should decline, because those portfolios have been established."
Added to this has been pressure on emerging markets to shore up their currencies in the face of capital flight by selling hard currency assets such as bonds.Although this might seem negative for issuers, "as it's happening in a period of risk-off, it generally tends to be quite bullish for bonds generally", he said.
"As much as that sell-flow is going through, it's being met equally, and in a little bit larger size, by demand from private institutions to take transfer ownership of those assets," said Jamieson.