(Updates issue size, pricing)
MADRID/LONDON May 8 (Reuters) - Spain's largest bank Santander on Thursday sold $1.5 billion worth of contingent convertible "CoCo" bonds, in a move that will help the bank beef up its capital base ahead of European stress tests this year.
The lender had already sold 1.5 billion euros ($2.1 billion) of so-called Additional Tier 1 bonds in March and had said then it planned to sell 6 billion euros more over the coming years. Such instruments convert into shares or are wiped out if a bank's equity capital falls below a set level.
Santander said last month it wanted to have a core capital ratio of 9 percent by year end under Basel III "fully-loaded" criteria, which takes into account changes that need to be made by 2019 and is a measure closely monitored by investors.
It is already above minimum requirements - its core capital ratio was 10.6 percent in March under the Basel III rules currently in place - but banks across Europe are racing to strengthen their solvency ratios as much as possible ahead of region-wide health checks.
These are taking place before the European Central Bank takes over as the euro zone's banking supervisor in November.
"This operation should have a positive impact of about 33 basis points in the bank's Tier 1 capital," BPI analyst Carlos Peixoto said of Santander's bond.
Santander's Spanish rival BBVA said it had a 'fully-loaded' core capital ratio of 9.9 percent at the end of March.
The bond, due in 2019, carries a 6.375 percent coupon, after pricing at the tight end of guidance. Demand was strong, totalling $10 billion, according to Thomson Reuters market news and analysis service IFR.
Dealers for the accelerated book building process are Credit Agricole, Deutsche Bank, Goldman Sachs, Morgan Stanley and Santander.
Investors who buy Santander's issue could see their bonds converted into equity if the bank's Tier 1 ratio falls below 5.125 percent.
($1=0.7183 euros) (Reporting by Julien Toyer in Madrid and Aimee Donnellan at IFR in London; Editing by Sarah White, Greg Mahlich and Pravin Char)