UPDATE 1-Hungary raises bond sale by 50 pct at first auction of 2013
* Three new series of government bonds offered, yields fall
* Yield hunt, rate cut expectations boost demand -traders
* C.bank leadership to change, investors eye new measures
(Adds trader comments, details)
BUDAPEST, Jan 10 (Reuters) - Hungary increased the size of its first 2013 government bond sale by half on Thursday following strong demand from investors seeking high yield and expecting further interest rate cuts and possible bond buying by the central bank, traders said.
They also said the solid demand amid positive global sentiment bode well for a potential foreign currency bond issue early in the year which Hungary flagged in December.
"This is a good omen for a potential foreign currency issue but of course that will also depend on international sentiment which is changeable," a fixed-income trader said.
Hungary sold 70.5 billion forints ($317.05 million) worth of bonds at auctions, lifting its original 47 billion offer, the Government Debt Management Agency (AKK) said.
The AKK offered a new series of bonds with three, five and 10-year maturities and the average yield fell on all three papers. The 10-year yield dropped the most, by 82 basis points from the last auction of that tenure on Nov. 29.
Since then the National Bank of Hungary has delivered its fifth rate cut in a row, trimming its main base rate by a total of 125 basis points to 5.75 percent by the end of last year.
Markets are pricing in further rate cuts this year to as low as 4.5 percent after a new leadership takes over at the central bank in March when the current governor's mandate expires.
Prime Minister Viktor Orban will pick a new chief central banker, probably an ally of his, who markets expect will be more supportive of government policies and open to more unconventional monetary policy tools such as possible bond buying on the secondary market, analysts have said.
"This (expectation) has further fuelled government bond buying," another fixed income trader said.
(Reporting by Krisztina Than/Gergely Szakacs; Editing by Susan Fenton)