REFILE-UPDATE 2-Emirates eyes benchmark 5-year dollar bond-leads

(Refiles to fix spelling of 'political' in eighth paragraph)

* Price talk 350 basis points over midswaps - leads * Final pricing, launch expected mid-week

(Adds analyst comment, background)

By Rachna Uppal

DUBAI, May 30 (Reuters) - Emirates [EMIRA.UL], Dubai's flagship carrier, is eyeing a benchmark five-year dollar bond with early talk indicating pricing of 350 basis points over midswaps, the lead arrangers said on Monday.

Emirates, one of the world's fastest-growing airlines, wraps up its bond roadshow, which began in Hong Kong on May 23, in Switzerland on Monday.

HSBC (HSBA.L), Deutsche Bank (DBKGn.DE), Emirates NBD ENBD.DU and Morgan Stanley (MS.N) have been mandated as joint lead managers (JLMs) and joint bookrunners for the bond sale.

"They (Emirates) are looking at a five-year, at about 350 basis points over midswaps," a banking source at one of the lead banks said.

Two other bankers with lead arrangers confirmed the details. Asked about the expected size of the offering, the first banking source said: "I do not think they are being too greedy with this one."

Benchmark bond issues are typically at least $500 million.

Final pricing and launch was expected to take place mid-week with U.S. and British markets closed on Monday for holidays.

While political instability in the wider region has hampered bond issuance this year, there is a large pipeline of potential Gulf issues. The UAE has been largely shielded from the unrest and is seen as a safe haven among regional peers.

Emirates itself postponed a planned offering in March after the uprisings in North Africa made rates more expensive. [ID:nLDE7281US]

"One of the reasons Emirates has not been a frequent issuer in the bond markets is because the company is very particular about the pricing at which it obtains its funding," said Chavan Bhogaita, head of markets strategy department at National Bank of Abu Dhabi.

"Furthermore, it is not strapped for cash and, hence, it has had the flexibility to wait until the spread environment in the bond markets improved substantially."

Dubai's sovereign credit default swaps, or the cost to insure its debt, are in the region of 340 basis points. CDS prices can help assess the credit risk associated with an entity.

It has been mooted in the past that proceeds of any bond offering would be used for expansion plans, as the airline does not face financing issues.

The Arab world's largest carrier posted a record profit of $1.5 billion for 2010, up 52 percent. [ID:nLDE7480NH]

Middle East bond issuance saw good demand last year as investors bought into attractive yields amid a low interest rate environment globally. (Additional reporting Archana Narayanan in Mumbai; Writing by Dinesh Nair; Editing by Amran Abocar and Dan Lalor)