* Century bond priced Tuesday to yield 6.1 pct-IFR
* Strong demand saw offering size double
* Sale could usher more long-dated bonds (Recasts, adds details, comment)
By Lizbeth Salazar
MEXICO CITY, Oct 5 (Reuters) - Mexico launched its first 100-year bond on Tuesday, to win cheap funds from global investors who are snatching up risky emerging market assets that promise relatively-high yields.
The first tranche of the century bond attracted enough demand for an issuance of $1 billion, double the $500 million expected earlier in the day, a source close to the deal said.
The bond, which IFR reported was priced to yield 6.1 percent, will likely attract the eyes of institutional investors and become a valuable reference point for future debt sales from Latin America's No. 2 economy.
"You don't have anything paying 6 percent on the sovereign side right now," said Klaus Spielkamp, a fixed income trader with Bulltick Capital Markets in Miami.
The appetite for Mexico's first-ever century bond was another example of investors' hunger for emerging market assets that promise a return bigger than those available in the world's most advanced economies.
For Mexico, the hunger means welcome access to cheap funds while in other Latin American economies like Brazil authorities are raising taxes to turn back the flood of investors.
The clamor for emerging market assets has grown as investors have watched economies considered rock-solid struggle with massive debts.
"The credit quality of Mexico has been improving as opposed to Ireland et al," said Tom Sowanick, chief investment officer of OmniVest in Princeton, New Jersey, which oversees more than $1 billion.
Mexico, which just celebrated the 200th anniversary of its struggle to gain independence from Spain, has never issued such a long-dated bond and Tuesday's sale was expected to put downward pressure on the shorter end of the yield curve.
The benchmark 10-year note yield fell to a record low this year as investors turned to developing countries for returns greater than offered by U.S. Treasury debt.
Mexico is not desperate for funds - even as it struggles out of a punishing recession - but the chance to pocket cheap funds might have been too tempting to pass up. Mexico's credit rating was downgraded last year but the country remains investment grade and has a stable outlook.
MORE LATAM CENTURY BONDS AHEAD?
Gabriel Casillas, chief economist at JPMorgan in Mexico, said the debt sale, via Deutsche Bank and Goldman Sachs, represents a sensible government step to shore up overall public finances while debt markets are inviting.
"If the government can bring a bond with this maturity, it means you have healthy finances, (but) I don't think it represents any structural change in the way bonds are issued," he said.
The yield on Mexico's 10-year bond MX10YT=RR was down 2 basis points at 6.14 percent on Tuesday afternoon. Yields on 30-year bonds were down 6 basis points at 7.11 percent. The benchmark's yield hit the historically low rate of 5.96 percent in August.
Tuesday's sale was priced at 94.276 with a 5.75 percent coupon to yield 6.10 percent, IFR reported.
As investors lavish money on growing economies, nations like Brazil have fretted about inflation and tried to keep a lid on the value of their currencies.
Earlier this week, Brazil doubled to 4.0 percent a tax on foreign investors buying local, fixed-income assets to curb a rise in the real which threatens to hurt exports.
If Mexico's pioneering move is a success, analysts expect other nations will mull their own century bonds.
"There is nothing stopping Brazil from doing one," said Nick Chamie of RBC Capital Markets. "It's literally having an investment bank coming to them saying 'We have clients lined up to do it, are you interested?' And they'll say 'yes'."
The big debt issuance follows other fund raising by Latin American countries. Last month Brazil's state controlled oil company Petrobras (PETR4.SA)(PBR.N) raised a record $70 billion in an IPO.
The last time the region saw a 100-year bond was in a corporate issue in 1997, when Chile's Embotelladora Andina sold a $100-million century bond, according to IFR Markets.
Mexico's 100-year issue could reach up to $80 billion, according to a securities filing with the U.S. Securities and Exchange Commission. (Reporting by Paul Kilby, Lizbeth Salazar, Samantha Pearson, Tomas Sarmiento, Luis Rojas Mena, Caroline Stauffer, Michael O'Boyle, Jennifer Ablan and Jean Luis Arce, Writing by Patrick Rucker; editing by Missy Ryan and Carol Bishopric)