UPDATE 1-Thai BAY plans 20 bln baht bonds in March

(Adds details, fund manager view)

BANGKOK, Feb 12 (Reuters) - Thailand's Bank of Ayudhya BAY.BK (BAY), 35 percent owned by a unit of General Electric (GE.N: Quote, Profile, Research, Stock Buzz), said on Tuesday it would sell bonds worth up to 20 billion baht ($608 million) to finance expansion.

The bonds would be divided into three tranches of two-, three- and four-year maturities and would be offered to both institutional and retail investors, Thailand's fifth largest bank said in a statement to the Securities Exchange and Commission.

"They are expected to set spreads similar to the previous issues which offered about 30-40 basis points over comparable government bonds," a fund manager said, referring to a bond sale by the bank in last October.

At 0415 GMT, benchmark two-year government bonds were yielding 2.97 percent in the secondary market, 3-year bonds were yielding 3.15 percent and 4-year debt was yielding 3.25 percent.

At 0417 GMT, shares in Bank of Ayudhya were up 1.23 percent, while the main Thai stock index .SETI was up 1.35 percent. ($1=32.90 Baht) (Reporting by Arada Therdthammakun; Editing by Darren Schuettler)