Russia will not dump Fannie, Freddie debt: FinMin

By Toni Vorobyova

MOSCOW (Reuters) - Russia is not planning to raise its exposure to debt issued by U.S. agencies Fannie Mae and Freddie Mac, but will not cut it rapidly, Russia's deputy finance minister said on Wednesday.

"At the moment we are not planning to increase our holdings. We are also not planning a sharp exit, because this is decent paper and it is bringing us decent earnings," Deputy Finance Minister Dmitry Pankin told a news conference.

On Tuesday, Freddie Mac had little trouble selling $3 billion of debt, seemingly passing an important test of the U.S. housing finance company's ability to raise funds. It said global central banks had bought around a third of the issue.

On Tuesday, Pankin's boss Alexei Kudrin said that Russia has continued buying the debt of the U.S. agencies this year, but not in sufficient quantities to replace all of the maturing paper.

At the start of the year Russia held $100 billion -- or over one sixth of its gold and forex reserves -- in Fannie Mae, Freddie Mac and Federal Home Loan Banks. The holdings have since been reduced by around 40 percent, the central bank has said.

The holdings have met hostility from some Russian media and the public, who are wary of risky investments.

This hostility has intensified as political tensions have grown between Russia and the West, including the United States, over the military conflict between Russia and Georgia.

Russian officials have tried to allay public concerns by stressing that they have actually made money on their investments in U.S. agency debt.

Pankin said Russia's oil stabilization fund had around 3.6 percent of its $160-plus billions invested in Freddie and Fannie, and had earned $72 million on that holding between January 30 and August 19 this year.

The oil fund is part of the gold and forex reserves, and thus its U.S. agency holdings are part of Russia's total investment in them.

Pankin later told state television channel Vesti 24 that even a recapitalization of the agencies by the U.S. Treasury would not be a big problem for Russia.

"This (potential move) will be a big event for the U.S. financial markets... But as far as our investments are concerned I believe the changes will be minimal," he said.

(Additional reporting by Dmitry Zhdannikov; Editing by Gerrard Raven)