UPDATE 2-Czech utility CEZ sells first 500 mln euro bond

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LONDON/PRAGUE, Oct 6 (Reuters) - CEZ <CEZPsp.PR>, the Czech power utility, sold 500 million euros ($636 million) of seven-year bonds on Friday, in its biggest sale of foreign-denominated debt to date, a company spokesman said.

The deal met with strong investor demand, attracting nearly 2.1 billion euros of orders from 125 investors and allowing CEZ to sell the deal at a tighter spread than initial guidance, said Societe Generale, which managed the deal alongside Deutsche Bank.

French, British and German investors each accounted for about 20 percent of the order book, SG said in a statement.

The 4.125 percent bond was sold at 99.209 percent of face value to yield 41 basis points over mid-swaps, the bookrunners said, a tighter spread than initial guidance for about 45 basis points.

CEZ, one of the biggest companies in central Europe by market capitalisation, has previously sold smaller bonds in dollars and euros, but this is the first benchmark-sized, or 500 million euro-plus, euro bond it has sold.

That could open CEZ up to a wider range of investors: many debt buyers do not consider smaller bonds, because they are not included in indexes and are often illiquid.

"The company has generally used proceeds of its bond issues for general-purpose corporate financing, so this issue is not attached to any particular project," said CEZ spokesman Ladislav Kriz.

Moody's Investors Service rates CEZ at A2, the fifth-lowest level ofs investment grade, while Fitch Ratings has an equivalent A rating. Standard & Poor's rates it one notch lower, at A-.

CEZ has two euro bonds outstanding: a 200 million euro, 7.25 percent bond due on Oct. 20 <CZ010342112=>, and a 400 million euro 4.625 percent bond <CZ019383415=> due June 2011. ((For the bond's terms and conditions, click on [nL06759112].)) ((Reporting by Kristina Cooke and Quentin Webb in London and Marek Petrus in Prague, editing by David Holmes/Greg Mahlich; +44 20 7542 8863; Reuters Messaging: kristina.cooke.reuters.com@reuters.net)) ($1=.7865 Euro)

Keywords: ENERGY CEZ BOND