UPDATE 2-Spain's ACS to issue bonds exchangeable for Iberdrola shares
* ACS issues 5-year bond against Iberdrola shares
* 405.6 million-euro issue follows similar deals in Spain
* Move allows ACS to cut Iberdrola stake (Adds conversion price, annual interest, details)
MADRID, March 13 (Reuters) - Spanish builder ACS said on Thursday it planned to issue a five-year bond of 405.6 million euros ($564 million) that could be exchanged for shares of Iberdrola, in a move that allows it to reduce its stake in the power utility.
ACS issued 721 million euros of similar bonds last October. The group, which has been selling assets to cut debt, had 14.85 percent of Iberdrola in 2013 and its stake now stands at around 5.5 percent.
Other companies in Spain, where many banks and industrial groups have cross-holdings, have also stepped up issues of exchangeable bonds in recent months as a source of funding and to partly unwind such stakes.
Lender Caixabank last year issued bonds that could be exchanged for part of its stake in oil group Repsol in a deal that helped boost its capital position.
ACS said in a statement to Madrid's stock market regulator on Thursday that the new bonds would be exchangeable for around 63 million Iberdrola shares, equivalent to just under 1 percent of the utility's capital.
The conversion price was set at 6.419 euros, representing a premium of nearly a third over the average price of the shares between when the issue was announced earlier on Thursday and when the price was fixed.
ACS said the bonds would carry annual interest of 1.625 percent, and that it could choose to hand over cash, Iberdrola shares or a combination of the two to bondholders.
The bondholders have a call option in March 2017, meaning they could ask to exchange the bonds for Iberdrola shares in three years' time.
ACS added that the proceeds of the issue would go towards refinancing existing debt and financing operations.
Iberdrola shares have gained 7.12 percent so far this year and are up 18.85 percent over the past 12 months.
BBVA, Credit Agricole, Royal Bank of Scotland and Unicredit are joint bookrunners on the deal, ACS said.
ACS shares were trading up 0.21 percent near the market close, while Iberdrola shares were down 0.97 percent at 4.787 euros.
Separately on Thursday, German builder Hochtief, which counts ACS as its biggest shareholder, installed its chief executive at the helm of majority-owned Leighton Holdings Ltd of Australia.
Hochtief also marginally sweetened a bid to increase its stake in Australia's biggest builder to about 74 percent from just under 59 percent currently, as it seeks to push through a restructuring of the firm.
($1 = 0.7192 euros) (Reporting by Sarah White and Tracy Rucinski; Editing by Paul Day and Pravin Char)