* Orderbook about triple the $2 bln of debt on offer -sources
* Premiums seen less attractive than Indonesia, Philippines
* Emerging market issuers face choice: pay up or go away (Updates with quotes, details, background)
By Rafael Nam and Lee Shin-hyung
HONG KONG/SEOUL, April 8 (Reuters) - South Korea received orders worth about three times the securities available in a $2 billion sale of dollar-denominated bonds, sources said, after offering premiums that investors deemend fair but not outstanding.
The $6 billion orderbook still lags the demand seen for sovereign bond sales from the Philippines and Indonesia earlier this year, both of which offered bigger premiums, investors said.
South Korea's sale is a sign of the choices emerging market issuers will face as they seek to sell debt in a world deluged by bonds from more developed economies and against issues from the private sector, which is armed with government guarantees.
"Asian emerging countries will compete through premiums. Indonesia and Philippines offered wider spreads, making them very attractive," said Rachana Mehta, head of fixed income at KE Capital Partners.
"It's more neutral (for South Korea) and we may not see a big rally when they start trading but at least we won't see big downsides."
To stand out, premiums will have to rise, investors said. South Korea itself is competing against the debt guarantee it has offered to its banks, which are expected to offer higher premiums hence making their debt more attractive than the country's own.
South Korea on Tuesday kicked off a sale of $2 billion in five- and 10-year sovereign dollar-denominated debt expected to price by Wednesday morning during U.S. trading hours, sources with knowledge of the deal have told Reuters.
Seoul will put the funds raised into a state fund intended to stabilise its foreign exchange market after the won tumbled to 11-year lows in early March on investor concerns over U.S. dollar shortages, which have decreased somewhat since then.
TYPICAL TUSSLE
South Korea is offering to pay around 400 basis points over equivalent U.S. Treasuries for the five-year note and round 437.5 basis points over U.S. Treasuries for the 10-year note, sources have told Reuters, the same as on Tuesday.
All sources declined to be identified because they were not allowed to talk publicly about the deal.
The amount of orders received so far should easily allow South Korea to complete its intended sale, though it lags the order book for Indonesia and the Philippines.
Indonesia attracted about $7.3 billion in orders for a two-tranche dollar-denominated sale in January, allowing the country to raise $3 billion in five- and 10-year bonds.
The Philippines attracted $5.8 billion in orders in a sale of only 10-year dollar-denominated notes that raised $1.5 billion in January.
The typical tussles between issuers looking to keep their borrowing costs down and investors looking for bigger premiums are expected to be especially intense this year, particularly for emerging market issuers that are considered riskier.
South Korea itself is not only having to compete against other emerging and developed market issuers, it also has to contend with fundraising by the country's banks, especially after on Tuesday it announced plans to expand its debt guarantee.
"In the future there will be a lot of new issuance from Korea especially in government-guaranteed paper and bank papers. If given the choice I prefer the government guaranteed debt because of the higher premiums," said KE Capital's Mehta.
Hana Bank last week priced $1 billion in three-yar notes at a spread of 542.6 basis points over equivalent Treasuries, far above the premiums offered by South Korea for shorter-term debt.
More South Korean banks are now expected to sell global debt after the government on Tuesday said it planned to extend a deadline for its government guarantee on foreign currency borrowings by six months.
The government also said it plans to allow maturities of up to five years from the initially approved limit of three-years. (Editing by Jan Dahinten)