UPDATE 2-Spanish companies scramble to issue debt
* Iberdrola and Gas Natural issue 750 and 800 mln euros
* BBVA sells 1.5 bln euro bond to repeat Santander's success
* Falling risk premium opens door for more corporate issues (Adds final issues, adds background)
By Carlos Ruano
MADRID, Sept 10 (Reuters) - Spanish firms are dashing into the bond market, taking advantage of a fall in interest rates after the European Central Bank pledged action to reduce the country's financing costs, and eager to move quickly in case the situation deteriorates again.
Power firm Gas Natural raised 800 million euros ($1 billion) through a seven-year bond with a 6 percent coupon on Monday while peer Iberdrola sold 750 million euros in a five-year bond, testing investor appetite after Telefonica's successful bond issue last week.
BBVA, Spain's second largest bank, sold 1.5 billion euros of a three-year bond with a 4.375 percent coupon on Monday, following a stellar issue by peer Santander on Friday.
Bank Banesto sold 500 million euros of a 2017 bond with a 4.75 percent coupon. Rival Sabadell has mandated an issue of 2-year mortgage-backed securities at mid-swaps plus 375 basis points, a source told IFR, a Thomson Reuters news and markets analysis service.
Other Spanish companies could follow suit shortly, debt traders said.
Spain's corporate bond markets have been frozen for months, taking their cue from the sovereign debt market where rates on Spain's 10-year bond reached a peak of more than 7 percent in July.
That level, seen by investors as unsustainable, has dropped since ECB President Mario Draghi announced an unlimited bond-buying programme to bring relief to troubled euro zone countries.
"It's not just that costs have come down, there's also more willingness to buy corporate debt as shown by Telefonica last week ... and we could see more corporations joining the trend in the next few days," a Spanish debt trader said.
Telefonica issued 750 million euros in five-year bonds on last Wednesday, joining other companies based in peripheral European economies to break an issuance freeze thanks to improving credit conditions.
The former Spanish monopoly, struggling with a dismal home market and a 57 billion-euro debt pile, set a 5.811 percent coupon on the Sept. 5, 2017 bonds.
"The companies are taking advantage to improve their liquidity risk, which had increased considerably in recent months," another debt trader said.
"I think we're going to see more issuances especially if today's deals are closed successfully, which is how it's looking now," he said.
The yield on Spain's benchmark 10-year sovereign bond hit a five-month low on Monday, with investor sentiment buoyed by European Central Bank bond-buying plans.
However, further falls were seen capped by uncertainty over when Madrid would seek aid to trigger the scheme, propelling Spanish companies to hit the bond market before it was too late. ($1 = 0.7821 euros) (Writing By Tracy Rucinski; Editing by Dan Lalor and Mark Potter)
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