UPDATE 1-Danish mortgage bond auctions draw big interest

* Danish lender auctions $2.2 bln of mortgage bonds

* Wednesday's auctions kick off record big Nov-Dec rollover

(Adds third auction, detail, background, analyst, lender
comments)

By Anna Ringstrom

COPENHAGEN, Nov 18 (Reuters) - The first auctions in a
record rollover of mortgage bonds in Denmark, the world's
third-biggest mortgage bond market, drew even bigger investor
interest than expected on Wednesday, credit analysts said.

About 660 billion Danish crowns ($133 billion) worth of
adjustable-rate bonds expire at the turn of the year and Danske
Markets has estimated that 556 billion crowns worth of new notes
will be sold in the mortgage lenders' auctions that kicked off
on Wednesday and will run into December. [ID:nLA677840]

Credit analysts have said that after a scarcity of overseas
buyers last year, these series of auctions are expected to
attract foreign interest because markets are no longer fraught
with the turmoil seen in late 2008.

Mortgage lender Realkredit Danmark sold 8.90 billion Danish
crowns ($1.8 billion) and 249 million euros ($371 million) worth
of mortgage bonds in four auctions.

Elisabeth Toftmann Asmussen, chief economist at Realkredit,
said the strong demand on Wednesday reflected liquid markets.

"Central banks have carried out (liquidity boosting)
measures so there is a large liquidity surplus in the market at
the moment," she said, adding that the expiry of other mortgage
bonds on Nov. 15 and Dec. 1 probably added to investor interest.

Analysts said yields on Wednesday came in lower than
expected.

"The bonds were surprisingly expensive, and the rate was
thus surprisingly low," said Nordea analyst Jacob Skinhoj. "It
indicates substantial demand among investors for adjustable-rate
bonds."

Mette Kornvig, analyst at Jyske Bank, said the results
indicated the upcoming auctions would be successful.

"The market sentiment is really positive. Foreign
(investors) have also entered the field and begun to increase
their share, especially in adjustable-rate bonds," she said.

The accepted yield in Realkredit's three auctions in crowns
were 1.98 percent, 2.87 percent and 3.44 percent respectively.
The accepted yield in the auction in euros was 1.43 percent.

Bids totalled 36.3 billion crowns, 4.28 billion and 1.27
billion in the auctions in crowns. Bids totalled 1.50 billion
euros in the auction in euros, Realkredit said.

Denmark has the world's third-biggest mortgage bond market
after those of the United States and Germany. Notes
traditionally tend to be bought by banks, pension funds and
other fixed-income investors.

Interest rates on a big part of the mortgage bonds are reset
through annual auctions of one-year, three-year and five-year
adjustable-rate loans.

Realkredit, which is owned by Danske Bank (DANSKE.CO), said
in a statement the average yield in the auction in crowns was
the lowest since the introduction of the current system in 1996.

Realkredit's auctions will run from Nov. 18 to Dec. 8.
[ID:nCSE38KY]

Lender Nykredit & Totalkredit will offer loans from Nov. 26
to Dec. 11. [ID:nCSE39hb]
(Additional reporting by Teis Jensen and Ole Mikkelsen; Editing
by Simon Jessop and David Holmes)
($1=4.970 Danish Crown)
($1=.6710 Euro)