RIYADH - Saudi Arabia has started selling its triple-tranche benchmark sized Islamic bonds, or sukuk, with tenors of 3, 6 and 10 years, fixed-income news service IFR reported on Tuesday.

Initial guidance has been placed around 85 basis points over U.S. Treasuries for the three-year sukuk, 100 bps over UST for the 6-year portion, and 110 bps for the 10-year tranche, said IFR.

Benchmark-sized is typically understood to mean at least $500 million. Pricing is expected on Tuesday.

The kingdom, the world's top oil exporter, is facing a projected budget deficit of 79 billion riyals this year amid lower oil revenue and increased spending to bolster non-oil growth and meet objectives of its Vision 2030 economic transformation plan.

On Friday, ratings agency Moody's upgraded Saudi Arabia's local and foreign currency rating to Aa1 from Aa2, citing increased predictability of the government's decision-making processes affecting the private sector.

BNP Paribas, Citi and Goldman Sachs International have been appointed as global coordinators and joint bookrunners to manage the debt sale.

Aljazira Capital, HSBC Bank, JPMorgan and Standard Chartered have been selected as the passive joint lead managers and bookrunners on the offering, IFR said.

Saudi Arabia's last bond issue in January saw the kingdom issue $12 billion of dollar-denominated bonds.

(Reporting by Shamsuddin Mohd; Additional reporting by Pesha Magid; Editing by Jan Harvey and Alison Williams)