UPDATE 2-GlaxoSmithKline Capital launches $9 bln debt sale

(Updates with launch, increased size)

NEW YORK, May 6 (Reuters) - GlaxoSmithKline Capital, a unit of drug maker GlaxoSmithKline (GSK.L: Quote, Profile, Research), on Tuesday launched a $9 billion bond sale after increasing it from the original $6 billion, an official at one of the lead managers said.

The sale was launched with yield spreads at the tight end of initial expectations, which along with the increased size is a sign of strong demand.

Glaxo plans to sell $1 billion of two-year floating rate notes with a coupon rate of 0.625 percentage point over the three-month London interbank offered rate.

It also plans to sell $2.5 billion five-year notes, $2.75 billion 10-year notes and $2.75 billion 30-year bonds all paying 1.73 percentage points over U.S. Treasuries.

Proceeds from the sale will be used for the repayment of debt, dividends, working capital and share repurchases.

Citigroup, JPMorgan and Lehman Brothers are managing the deal, which is expected to be priced on Tuesday or Wednesday.

GlaxoSmithKline is rated A1 by Moody's Investors Service, A-plus by Standard & Poor's and AA-minus by Fitch Ratings. (Reporting by Caryn Trokie in New York and Richard Barley Natalie Harrison in London; Editing by Chizu Nomiyama,)