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UDPATE 3-GMAC plans 2.5 bln euro 2-part bond sale

(Updates amount of three-year bond, adds byline, quote, updates prices)

By Richard Barley

LONDON, Sept 22 (Reuters) - General Motors Acceptance Corp (GMAC), plans to sell 1.5 billion euros of three-year and 1.0 billion euros of seven-year bonds, banks and investors said on Monday.

GMAC is the financing arm of General Motors , the world's number one automaker.

BNP Paribas, Deutsche Bank, UBS and WestLB have been mandated to manage the fixed-rate bond sale.

A source close to the deal said it was expected to be launched on Monday or Tuesday.

Market sources said they expected the three-year bond to be priced to yield 160 basis points over benchmark swaps, with the seven-year bond seen at around 195 basis points over swaps.

GMAC has increased the three-year tranche to 1.5 billion euros from an initially planned 1.0 billion euros, an investor said.

Existing bonds of GM and GMAC fell in value as news of the new bond sale emerged, traders said.

"We are seeing auto spreads 10-15 wider in the short end because this is new issuance for the third time in two weeks," in autos, said one trader. "It's not a great environment right now."

Another trader said that while he expected little trouble with the sale, it had knocked outstanding General Motors paper. The company's 8.375 percent 2033 euro bonds was bid at 301 basis points over Bunds on Friday afternoon, some five basis points wider on the day.

"It's priced reasonably aggressively, but clients are looking to increase their exposure to the sector, so they can get away with it," he said of the price talk on the new bond.

However, he said the bond sale could be affected by the fact that issuance in the auto sector has been heavy of late.

GM's new deal comes on the heels of a 1.0 billion euro three-year offering from a unit of DaimlerChrysler AG . That bond, sold on Friday, drew 3.3 billion euros in orders and traded up sharply after launch.

Earlier in the month, both Ford Motor Co. and PSA Peugeot Citroen borrowed in euros, raising 2.1 billion euros between them.

GM set bond market records earlier this year as it sold $17.6 billion in dollar, euro and sterling bonds, plus securities convertible into shares. The company was raising cash to plug a hole in its pension fund.

GMAC is rated A3 by Moody's Investors Service, BBB by Standard & Poor's and BBB+ by Fitch Ratings.

--Additional reporting by David Wigan in London.