UPDATE 1-S.Korea's Shinsegae to sell benchmark 3-yr dollar bond

(Updates with details, background)

HONG KONG, June 13 (Reuters) - South Korean retailer Shinsegae (004170.KS) plans to sell a three-year dollar bond, Moody's and Standard & Poor's said on Friday, with both assigning investment grade ratings to the proposed debt.

Shinsegae is looking at issuing a benchmark-sized deal, or typically between $300-$500 million, a source involved in the deal added, declining to be identified because he was not authorised to talk to the media about the transaction.

The retailer has appointed Deutsche Bank (DBKGn.DE) and UBS (UBSN.VX) (UBS.N) as the lead managers for the bond sale, the source said.

Shinsegae, South Korea's biggest discount store operator and its third-biggest department store operator, will sell the debt to refinance maturing debt as well as for general corporate purposes, Moody's Investors Service said in its statement.

Moody's assigned the proposed debt a rating of A3, while Standard & Poor's Ratings Services rated the bonds as A-minus, both six notches below the top investment grade.

Shinsegae had met investors in Singapore and Hong Kong in April as part of a non-deal bond roadshow, with UBS arranging the meetings, two sources had told Reuters then.

The retailer operates the E-Mart chain, South Korea's biggest discount store chain, but is facing increasingly tough competition.

Tesco Plc (TSCO.L), Britain's biggest retailer, last month said it would buy 36 discount stores for $1.9 billion from domestic chain E-land, as it looks to beef up and challenge Shinsegae's E-Mart stores.