UPDATE 1-Australia's CBA selling 5-yr Samurai bonds

(Updates with details, background)

HONG KONG, April 3 (Reuters) - Commonwealth Bank of Australia Ltd (CBA) (CBA.AX), Australia's second-biggest lender, is seeking to sell five-year Samurai bonds that could come by early next week, according to a term sheet seen by Reuters on Thursday.

CBA would become latest foreign issuer to turn to Japanese investors this year via the so-called Samurai bonds as the global credit crunch has made it too expensive for many to raise money via dollar- or euro-denominated bonds.

The Australian lender's planned five-year bonds will consist of a fixed-rate tranche with a guidance of 98-112 basis points over the offer swap, and a floating-rate tranche with a guidance of 98 to 112 basis points over three-month yen LIBOR JPYLIBOR.

No size has been determined, according to the term sheet, but pricing is targeted for early next week.

Daiwa SMBC, Nikko Citi and Nomura are lead managing the deal for CBA, which is rated "AA" by Standard and Poor's, or two notches below the top investment rating.

Foreign issuers are borrowing in Japan given that the costs are cheaper in a country that is seen as having been relatively more insulated from a global credit crunch and one that enjoys comparatively lower interest rates, bankers have said.

In turn, Japanese investors get higher yields than debt from Japanese issuers with similar credit ratings.

Issuance in Samurai bonds surged to $4.9 billion in the first three months of the year from 19 issuers, compared with $1.6 billion in the same period of 2007 from six issuers, according to data from Thomson Financial.

Australian lenders have been particularly aggressive in tapping yen bond markets, with analysts citing an attractive cross currency swap as one of the factors behind the rush.

More than 302 billion yen has been raised by Australia's major banks so far this year, which has included a 135.8 billion yen sale by Australia & New Zealand Banking Group Ltd's (ANZ.AX), the largest Samurai transaction from the country. (Reporting by Rafael Nam; Editing by Anne Marie Roantree)