LONDON, July 14 (Reuters) - The cost of insuring the debt of British airport operator BAA against default fell sharply on Monday after the company announced a key step in its long-awaited refinancing plans.

BAA, bought by Spain's Ferrovial (FER.MC: Quote, Profile, Research) in 2006, said on Monday it had made significant progress on a plan to refinance its debt and would ask investors to vote on a bond exchange [ID:nL14718658].

Five-year credit default swaps on BAA tightened around 70 basis points versus late on Friday to 200 basis points, traders said.

The bid-offer spread was wide, at 175 to 225 basis points, one of the traders said, which reflects uncertainty about how the plans will impact BAA's CDS.



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