RPT-UPDATE 3-Fresenius plans 1st new Europe junk bond in 18 mths

(Repeats to wider readership)

* 1st European high-yield issue since credit crisis began

* Confirms 2008 outlook

* Gives 2009 sales and net income forecasts

* Fresenius debt price falls, cost of insuring it rises

(Recasts story with further details, context on bond sale)

LONDON/FRANKFURT, Jan 12 (Reuters) - German healthcare group Fresenius SE FREG_p.DE announced plans on Monday to sell $650 million of bonds, which would be the first European high-yield bond issue since the start of the credit crisis in July 2007.

Fresenius, which provides products and services for dialysis, hospital and outpatient medical care, also said it was aiming for 2009 net income growth to outpace organic sales growth and confirmed its expectations for 2008 results. The company aims to sell senior unsecured notes maturing in 2015 or later to repay part of a $1.3 billion bridge loan it took out in September 2008 to finance the $4.6 billion acquisition of APP Pharmaceuticals.

"Fresenius is a good candidate to reopen the high-yield market," said Jochen Schlacter, a credit analyst with UniCredit (HVB). "From a business point of view, it is a relatively safe haven, with the demographics in their favour and steady cash flow."

Deutsche Bank has been named as lead manager of a large group of banks handling the sale, and pricing is expected later this week, several sources familiar with the planned issue said.

BONDS, CDS SLUMP

The cost of buying protection against Fresenius debt rose, and prices of its bonds fell on Monday. A company typically pays a premium to sell a new bond in the market. That then tends to push the prices down and the yields up for its existing bonds in the secondary market.

Five-year credit default swaps (CDS) on Fresenius debt were about 63 basis points wider at around 382 basis points, according to Markit data, after earlier widening by 90 basis points.

Its 500 million euro bond DE024091937=, which matures in 2016, was about four points lower, bid at 86 percent of face value, a trader said, adding, "The market hasn't taken it too well."

Its bond offering should attract sufficient demand for the issue to succeed, but if not, then its bridge loan would convert to a long-term loan "probably not at the most favourable of terms", Schlachter said.

Fresenius said in a news release it had already completed the rest of the financing of the APP acquisition via $2.5 billion in term loans, $550 million in revolving facilities, a 289 million euro equity issue and a 554 million euro mandatory exchangeable bond.

Its shares fell 0.89 percent to 40.25 euros.

Fresenius is due to release 2008 results on Feb. 19 and will provide more details then, it said.

The company said it expected 2009 group organic sales growth to be at least in a mid single-digit percentage range, with net income before special items growing faster than sales.

The company said in a statement the notes were being offered in private placements only, but bankers and analysts said that wording could be misleading.

The bond is a public offering in Europe, while in the U.S. market it comes under typical regulations for high-yield bonds that limit sales in the retail market, they said.

Moody's on Monday assigned a "junk" Ba1 rating to the planned bond issue, one notch below the Baa3 rating of the company's secured term loan and other senior credit facilities, which is the lowest investment-grade rating.

The company's senior unsecured rating is a speculative-grade BB by both Standard & Poor's and Fitch Ratings. (Reporting by Jane Baird, Eva Kuehnen, Natalie Harrison, Jonathan Cable, editing by Will Waterman)