* Spain swaps expensive crisis bonds for new issue
* Treasury accepts 3.66 billion euros of 2015 bonds in switch
* Orders top 18 billion euros for new 10-year bond
* Measures follow lead of other peripheral countries
By John Geddie and Sarka Halas
LONDON, June 12 (Reuters) - Spain took steps to ease hefty bond repayments coming due next year by switching expensive debt issued at the height of the euro zone crisis for a new 10-year bond on Thursday.
The fragile euro zone peripheral state is the last of its peers to adopt such measures, as it looks to lengthen the average maturity of its debt and soothe investor nerves around how it will manage to pay back around 500 billion euros of bonds that fall due in the next four years.
Bankers managing the transaction have received over 18 billion euros of orders for the new bond, which includes 3.66 billion euros of bonds maturing next year in exchange.
The new bond will price later on Thursday to yield around 2.8 percent, some 5 percentage points lower than Spain's borrowing costs were at the height of its debt crisis in 2012.
"It helps, if you are a country that has been in a lot of stress, to take steps to manage your debt repayments, and in that sense Spain has been behind other peripheral countries," said Michael Michaelides, a strategist at RBS.
The market for Spanish debt has dramatically improved since the height of its crisis, bolstered by loose central bank policy and a fledgling economic recovery.
The returns demanded by investors for buying Spanish 10-year debt spiked to 7.8 percent in the middle of 2012, as many thought the country would be forced into a bailout. They now stand at record lows of around 2.5 percent.
As a result Spain, which could only afford to issue shorter bonds during the crisis, has seen the average maturity of its debt fall from a peak of 6.85 years in 2007 to 6.35 years at the end of last month.
More than half of Spain's 927 billion euro ($1.25 trillion) debt matures within the next four years, according to Thomson Reuters data.
The country now has the perfect opportunity to try and ease this strain, say bond traders.
Recent policy moves by the European Central Bank to keep rates at historic lows are encouraging investors to extend duration in a hunt for yield.
"If you look at the redemption profile of peripheral countries it makes sense, especially given that in 2010-11 they issued a lot of short-term paper, to have this kind of debt management operation on a more regular basis," said Patrick Jacq, rate strategist at BNP Paribas.
The last time Spain used these kinds of active debt management tools was back in 2006, but its southern European neighbour Italy and the bailed-out countries of Ireland, Portugal and Greece have all done so in recent years.
The Spanish Treasury has accepted 2.143 billion euros of a 3 percent April 2015 bond, 604 million euros of a 4 percent July 2015 bond and 915 million euros of a 3.75 percent October 2015 bond as part of the switch offer.
It will price a new 10-year bond - maturing in October 2024 - later on Thursday.
Strategists say this exercise could be the first of many.
Spain - which has one of the highest budget deficits in the euro area - announced last week that a boost in tax revenues had allowed it to cut its net issuance target to 55 billion euros from the 65 billion euros that it announced in January.
Treasury sources told Reuters that Spain's 2014 gross debt issuance target would not change, however, giving it room to buy back more expensive bonds already in the market or just keep the extra cash raised to ease its 2015 issuance target. (Additional reporting by Marius Zaharia in London; Editing by Kevin Liffey and Philippa Fletcher)