UPDATE 1-BBVA places $100 mln in mortgage debt in Mexico

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MEXICO CITY, March 12 (Reuters) - The Mexican arm of Spanish bank BBVA placed $100 million worth of home loans with investors on Wednesday, its second issue in the country's small but fast-growing mortgage-backed debt market.

BBVA (BBVA.MC: Quote, Profile, Research) said it sold almost 1,600 mortgages in the 1.1 billion peso 20-year issue, rated "AAA(mex)" by Fitch Ratings.

Mexico's mortgage industry is expanding quickly thanks to economic stability and a government drive to see 1 million homes built and sold per year. But the country's mortgage-backed debt market remains small.

Fitch said in a recent report that Mexican lenders planning to sell mortgage-backed securities will have to accept lower prices this year as the U.S. debt crisis spooks investors.

Still, lenders plan another year of sharp growth in 2008, with total issues more than doubling to about $8 billion, the ratings agency said.

BBVA's Mexican arm, BBVA Bancomer, first issued mortgage-backed debt in December last year.

A crisis in the U.S. subprime mortgage market, which caters to borrowers with patchy credit histories, has snowballed into a credit squeeze around the world and may push the U.S. economy into a recession this year.

Mexican bankers and government officials say there is little risk of the same problems surfacing in Mexico's housing industry any time soon.

Most mortgage applicants in Mexico are first-time home buyers, many of them with low incomes and little experience with banks. But the country does not have a subprime sector. ($1=10.7655 pesos) (Reporting by Noel Randewich; editing by Carol Bishopric)