UPDATE 1-Mexico's Infonavit places $335 mln in mortgage debt

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MEXICO CITY, June 11 (Reuters) - Mexican mortgage lender Infonavit said on Wednesday it placed 3.5 billion pesos ($335 million) worth of mortgage-backed debt with investors at a low yield despite concerns about worsening inflation.

Infonavit, which accounts for two-thirds of mortgage lending in Mexico, said it sold the issue in inflation-pegged units mostly to the country's private pension fund operators.

The government-run lender said it sold the debt at a yield of 120 basis points above the inflation-pegged bond reference.

"It was one of the lowest (yields) in the mortgage-backed market, despite worries in the market about inflationary pressure," Infonavit said.

Mexico's inflation rate jumped in May to its fastest pace since late 2004 on rising food prices, putting pressure on the central bank to raise borrowing costs despite a slowing economy.

In recent years, Infonavit, banks and specialized lenders in Mexico have begun selling mortgage-backed debt. But the market for that debt remains small and has yet to attract significant interest from big foreign investment funds.

Since its first mortgage-backed debt issue in 2004, Infonavit has sold more than $2 billion worth of home loans.

The lender, which is funded by employer contributions, provides mortgages mostly for homes that cost less than $40,000.

The United States is facing a possible recession as troubles in housing and credit markets hit consumers and investors, but Mexican housing officials say there is little risk of the same problems surfacing in Mexico any time soon.

Mexico does not have a subprime lending market and banks keep almost all of their mortgages on their own books. ($1 = 10.43 pesos) (Reporting by Noel Randewich, Editing by Kenneth Barry)