* Process can take up to a year
* Paves way for bond deal to close funding gap
* Myanmar currently unrated by top 3 agencies (Adds comments from experts, central bank)
By Lawrence White
HONG KONG, July 17 (Reuters) - Citigroup Inc and Standard Chartered Plc are set to advise Myanmar on its first credit rating, according to people with direct knowledge of the matter, paving the way for the country to issue its maiden international bond.
After decades of isolation from international capital markets under military rule, Myanmar faces a widening current account deficit that could be bridged by borrowing once it has a credit rating from agencies such as Fitch, Moody's or Standard & Poor's.
None of the big three agencies have currently assigned Myanmar a rating, which professional investors use as a benchmark of a country's ability to repay debt.
"Getting a credit rating is of the first importance for Myanmar, helping it to clean up its public finances," said Sean Turnell, a professor at Macquarie University in Sydney who has advised the U.S. Congress on Myanmar's economy.
"It's also important symbolically, sending the signal the country is...not the land of caprice it was so often in the past."
Citi and StanChart will this month be given a formal mandate to advise the Southeast Asian nation on the steps necessary to earn the credit rating, one of the sources said, declining to be identified because the matter was not yet public.
An official from the Central Bank of Myanmar said he was aware of the credit rating mandate, but could not elaborate further.
The process can take up to a year, the sources said, as the banks help a country with the technical steps necessary to meet the agencies' criteria for a given rating. Once the rating is assigned, the country can then use the benchmark to market bonds to international investors.
Myanmar would, in common with other debut issuers, likely aim for a 'benchmark'-sized bond of around $1 billion once it has a rating, one of the sources said.
BELOW INVESTMENT GRADE
One rating advisor with a rival bank said Myanmar was in a similar stage of development to Vietnam in the 1990s, when it first got a rating, although he added there was more investor interest in resource-rich Myanmar's business potential than was the case with Vietnam at the time.
"I would place the country in the high single B, low BB category given its strengths compared with Vietnam," he said. "But ratings agencies may take a conservative stance and put them in the B category."
Myanmar had few companies or banks that were likely to use the sovereign rating as a benchmark for debt issuance, but the rating would provide guidance for FDI investors assessing their risk exposure, he said.