UPDATE 1-Blackstone selling $600 mln in first bond sale

* Blackstone selling $600 mln in first debt offering

* To use for general corporate purposes (Adds details, rewrites throughout)

NEW YORK Aug 13 (Reuters) - Private equity firm Blackstone Group (BX.N) is selling $600 million in its first corporate bond offering, a market source said on Thursday.

The 10-year notes are expected to yield 312.5 basis points over comparable U.S. Treasuries, according to the market source. Citigroup and Morgan Stanley are the joint lead managers on the sale.

Blackstone, the first major U.S. private equity firm to become publicly traded when it listed in June 2007, announced plans for the bond offering on Wednesday and said proceeds would be used for general corporate purposes.

Companies have been taking advantage of falling borrowing costs to stockpile cash while interest rates are relatively low and credit markets are rebounding. They typically use the funds for acquisitions, capital expenditures or refinancing debt that comes due in future years.

Blackstone, which bought hedge fund business GSO Capital in 2008, has said in the past it sees longer-term opportunities to make acquisitions and sees consolidation in the alternative asset management industry.

Blackstone, when it reported earnings earlier in August, said it had strengthened its capital and liquidity position, and has $784.6 million in available cash.

Borrowing costs have fallen for corporate bond issuers as signs of healing in the economy and credit markets have boosted investor demand for corporate debt.

There was thought to be good demand for the company's debt, though there are few other sales from asset managers that could be used to compare the debt's pricing.

"It will be interesting to see how investors will monitor and valuate the ongoing performance of this," said Ricardo Kleinbaum, trading sector specialist at BNP Paribas in New York.

"The problem with asset managers is that you're not buying the assets, you're not even buying the performance of the funds directly. You're buying the stability of investors buying into those funds and the fees that they get from them," Kleinbaum said.

Standard & Poor's Ratings Services earlier this year assigned an A long-term counterparty credit rating to Blackstone, and Fitch Ratings this week assigned it an A-plus long-term issuer default rating. An A rating is the sixth-highest investment grade, while A-plus is the fifth-highest. (Reporting by Caryn Trokie, Karen Brettell and Megan Davies; Editing by Leslie Adler)