Wires

UPDATE 1-Spain launches private placement for regions fund

(Adds banks, Andalusia aid request)

MADRID, Oct 8 (Reuters) - Spain's Treasury will carry out a4.86 billion euro ($6.3 billion) private placement to financepart of the country's regional liquidity fund, issuing bondsthat will mature in 2015, 2016 and 2017, the Treasury said onMonday.

The southern region of Andalusia said it had sent a letterto Madrid on Monday formally requesting 4.9 billion in aid fromthe 18 billion euro ($23 billion)fund, which has littlefirepower left after six regions asked for help.

The private placement will launch on Oct. 11 and close onOct. 17, the Treasury said. The deal follows a successfulprivate placement in September.

Spain set up the regional liquidity fund this year to helpthe country's regions cover maturing debt costs. Spanish banksare expected to contribute 8 billion euros to the fund with theremainder coming from lottery funds and sovereign debt.

The country's biggest lenders Santander , BBVA

and La Caixa will contribute the lion'sshare of the loan to form part of the fund, banking sourcesclose to the negotiations told Reuters inSeptember.

Spain's 17 highly-devolved regions overshot deficit targetsin 2011, and are expected to miss them again this year.

The Canary Islands were the latest region to request aid,asking for 757 million euros on Friday, leaving the fund witharound 1.5 billion euros.($1 = 0.7711 euros)

(Reporting by Clare Kane and Manuel Ruiz; Editing by Ron Askew)

((clare.kane@thomsonreuters.com)(+34 91 585 2130)(ReutersMessaging: clare.kane.thomsonreuters.com@reuters.net))

Keywords: SPAIN TREASURY/

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