Investing.com -- Bank of America analysts pointed to three potential areas for U.S. asset monetization following comments from Treasury Secretary Bessent about plans to “monetize the asset side of the U.S. balance sheet” within the next 12 months.
While details remain unclear, BofA analysts note that potential avenues could include government-owned property, agency investments, and precious metals.
One area under consideration is Plant, Property & Equipment (PP&E), which makes up over $1.3 trillion in U.S. government assets.
“The Dept of Defense (DoD) holds approximately 64.7% of the gov’t’s total PP&E,” BofA notes, adding that national security concerns and congressional approval requirements make widespread sales of these assets unlikely.
Additionally, the financial benefits of selling PP&E are said to be uncertain. “Selling assets does not raise funding for other projects unless the net effect reduces deficits,” the analysts caution.
Another potential option is agency investments, specifically holdings in mortgage giants Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC), according to BofA.
They explain that the investments could be liquidated to generate funds for a sovereign wealth fund or other government priorities, though BofA does not assign high odds to this occurring in the near term.
The third area BofA highlights is gold and silver holdings, which could be revalued or sold. While analysts do not expect immediate action, they acknowledge that monetizing these assets could have a significant market impact, particularly on gold prices.
Despite the possibilities, BofA remains skeptical about the likelihood of large-scale asset monetization in the near term.
“We place relatively low odds of monetization for any assets,” the analysts wrote, noting that the complexity of government finances makes such moves challenging.
However, given Bessent’s remarks, BofA suggests investors stay aware of potential shifts in U.S. asset management strategies.