UPDATE 1-RLPC-Gas Natural's 19 bln euro loan to launch next week

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By Zaida Espana

LONDON, Aug 28 (Reuters) - Spanish utility Gas Natural's (GAS.MC) 19 billion euro ($28.1 billion) loan will launch to a wider syndication early next week, banking sources said on Thursday, joining a congested syndicated loan market.

Gas Natural's loan, which backs the purchase of a majority stake in Union Fenosa (UNF.MC), will provide financing for the acquisition including an aval -- a guarantee required by Spanish stock market regulator CNMV -- and will refinance existing debt.

It will be competing for commitments with around $85 billion of large M&A loans in syndication in an illiquid loan market.

These include a $45 billion loan backing Belgian brewer InBev'S INTB.BR acquisition of Anheuser-Busch BUD.N, a $14 billion loan backing BG Group's (BG.L) bid for Origin Energy (ORG.AX) and a 16.1 billion euro loan backing Schaeffler's acquisition of Continental AG (CONG.DE).

The recent run of large acquisitions has produced $209 billion of M&A loans in the year to date, or just under half of all lending in Europe, the Middle East and Africa of $571 billion, according to data from Reuters Loan Pricing Corp.

A bank meeting for Gas Natural's loan, which is being arranged by Barclays, BNP Paribas, Caja Madrid, Citigroup, ING, La Caixa, Royal Bank of Scotland, Santander, Societe Generale and co-ordinator UBS, will be held in Barcelona in mid September, a banker said.

NO QUESTION

Syndication of InBev's $45 billion loan closed with a shortfall at the top level last week, showing banks are being selective with limited funds amid a liquidity squeeze that is set to intensify towards the year end, senior bankers said.

"There is no question that towards the end of the year banks will have made budget and lending will be more limited. If you are launching a deal in September, you need to think where you will be in December and year-end balance sheets", a senior banker close to the deal said.

Like other recent large M&A loans, bankers expect Gas Natural's loan to have a large component of short-term debt with a one-year maturity and a one-year extension option that will be quickly refinanced with capital markets issues and disposals.

Gas Natural has said it plans to make disposals of more than 3 billion euros, which will go towards repaying the loan.

The acquisition is also backed by significant equity contributions from Gas Natural's shareholders, Spanish oil major Repsol (REP.MC) and holding company Criteria (CRIT.MC), which said on Thursday it had raised its stake to 36.7 percent by buying a further 1.12 percent of Gas Natural for 179 million euros in the second quarter.

The shareholder equity contributions are designed to maintain an investment-grade rating of at least BBB and Baa2 after the acquisition, according to Gas Natural, which has a single A rating from Standard and Poor's and Fitch. (Additional reporting by Judy MacInnes in Madrid; Editing by David Holmes)