UPDATE 1-Gazprom <GAZP.MM> to price benchmark dlr bond-sources

LONDON, April 2 (Reuters) - Russia's Gazprom GAZP.MM is expected to price a benchmark two-tranche dollar bond later on Wednesday, banking sources said.

The deal will have a total size of no more than $1.5 billion, against initial speculation of a $2 billion deal, and will be lead managed by Citi and Morgan Stanley, sources added. Societe Generale is a co-manager.

The bond will be issued by Gaz Capital as part of Gazprom’s $30 billion issuance programme.

Initial yield guidance is for the five-year tranche to be priced at 400 basis points over mid-swaps and the 10-year tranche at 400-425 bps over mid-swaps, sources said.

The deal may price as early as U.S. trading hours on Wednesday, one source said.

The issue by the world’s largest gas producer, a regular borrower in the Eurobond markets, follows a roadshow in London and the United States.

Analysts said it signalled a reopening of the dollar market for emerging market debt following recent market turbulence. (Reporting by Carolyn Cohn and Sebastian Tong, editing by Mike Peacock)