Reuters has an interesting update on the subject of my Russia Blog post from last week (The Consequences of Growing U.S.-Russia Financial Ties That Bind).
As it turns out, the Russian Central Bank still owns $50 billion in U.S. government-backed agency securities, including Fannie Mae and Freddie Mac, but this is short term (less than one year) paper, and the central bank will let the paper reach maturity and presumably move on to another investment. Russian sovereign holdings of U.S. agency securities are still dwarfed by the $400-$500 billion held by Chinese central banks.
Click on the extended post to read an excerpt from the Reuters story.
Russia's Central Bank building in Moscow
Russia cuts exposure to Freddie, Fannie
By Yelena Fabrichnaya
Monday, July 28, 2008
MOSCOW - Russia has cut its exposure to U.S. mortgage lenders Fannie Mae and Freddie Mac to less than $50 billion by not refinancing matured short-term debt, a senior central bank official told Reuters on Monday.
Russia held about $100 billion in U.S. agencies Freddie, Fannie and Federal Home Loan Banks at the start of 2008, as part of its now near-$600 billion reserves, although over 80 percent of the holdings were due to mature within the year. "It's now less than $50 billion," central bank first deputy chairman Alexei Ulyukayev said.
"We had short-term paper. They mature: you can refinance and buy some more, or you can not," he told journalists later, when asked about why the central bank had reduced its holdings. Ulyukaev did not comment on Russia's holding in the U.S. Federal Home Loan Bank System (FHLB).
Click here to read the rest of the story over at the UK Guardian website.
Vladimir F. Kuznetsov is currently providing corporate development and fund raising services for a number of Asian mineral development companies. Previously, he served as director of equity finance at the FINAM Investment Company in Moscow and published his own blog on Russian capital markets, Equity Finance in Russia. Mr. Kuznetsov is a fellow of Discovery Institute's Real Russia Project.