UPDATE 1-Air France-KLM issues 575 mln euro convertible bonds

* Launches convertible bonds for up to 661 mln euros

* France says to join issue to maintain stake

(adds details and Economy MInistry statement)

PARIS, June 16 (Reuters) -Air France-KLM (AIRF.PA) launched a convertible bond issue to raise 575 million euros ($797 million), and the French Economy Ministry said it would take part in the issue to maintain its 15.7 stake in the air carrier.

Air France-KLM said the OCEANEs bonds, which will mature on April 1, 2015, can be increased to around 661 million euros if an over-allotment option was exercised, and will carry a yield spread of between 1.86 percent and 2.36 percent above the swap.

"The receipt of the issue will be mainly for the financing of the Air France-KLM fleet," the company said in a statement.

"While ensuring through this investment that its stake in the group is maintained, the state intends to show its full support in Air France-KLM's assets and to contribute to its development," the Economy Ministry said in a separate statement.

On Tuesday, weekly newspaper Le Journal des Finances had said in its online edition that Air France-KLM had postponed the issue to avoid coinciding with a bond issue from French cable group Nexans (NEXS.PA).

(Reporting by Marie Maitre; Editing by Kim Coghill)

((marie.maitre@reuters.com; +33 1 4949 5331; Reuters messaging: marie.maitre.reuters.com@reuters.net))

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