Russia to invest in Fannie Mae, Freddie Mac bonds

Source: Exec Digital USA

Date :2/22/2008 5:23:06 AM

Russia announced Thursday it will buy Fannie Mae and Freddie Mac bonds through its sovereign wealth funds, Russia's Finance Ministry said.

Bloomberg News said that Russia will invest money from its Reserve Fund and National Wellbeing Fund into 15 government bond funds in Europe and the United States, including those in US home finance companies Fannie Mae and Freddie Mac.

It will also purchase government bonds in the U.K., Germany, France, Austria, Canada, and the Netherlands, Bloomberg News reported.

These include the UK's Network Rail MTN Finance, France's Dexia Group, and Landwirtschaftliche Rentenbank, Germany's agriculture finance agency, Germany's state-owned development bank KfW Group, and the US's Federal Home Loan Banks and Federal Farm Credit Banks.

Sovereign wealth funds

Over the past year, sovereign wealth funds have provided a needed infusion of capital to investment-strapped U.S. corporations, many of which are in the midst of trying to rebuild balance sheets following losses sustained during the surge in subprime mortgage and related asset defaults. To-date, sovereign funds have invested about $60 billion in the U.S., according to data compiled by the U.S. Federal Reserve.

Russia

Foreign sovereign fund wealth stems from increased oil revenue, with Russia being a classic example. Cash-strapped a decade ago, record-high oil prices and privatization have helped propel an economic boom in Russia, including soaring hard, foreign currency reserves.

To date, it has amassed more than $700 billion in foreign currency reserves as amid an economic expansion that's featured a growing middle class, a thriving domestic commercial sector, and broadening trade ties with the E.U. and China.

February 22, 2008