By David French

DUBAI, June 11 (Reuters) - Saudi Arabia's state airports operator has picked three banks to arrange the second tranche of its local Islamic bond programme, banking sources said on Tuesday, with a sale seen matching the firm's record-breaking $4 billion debut sukuk in 2012.

The General Authority for Civil Aviation (GACA), which oversees the air industry in the Kingdom, has chosen HSBC Holdings' HSBA.L Saudi Arabian unit and the investment banking arm of state-owned National Commercial Bank to manage the riyal-denominated transaction, four banking sources said, speaking on condition of anonymity.

Saudi Arabia is investing heavily in infrastructure projects and revamping many of its airports to cater for growing passenger traffic, including through a planned 27 billion riyal ($7.2 billion) development of Jeddah's King Abdulaziz Airport.

Standard Chartered STAN.L will also be involved in the transaction, having pitched jointly with NCB Capital, but will hold a more junior role than the other two banks, two of the sources said.

The deal will be the first local currency Saudi debt issue that Standard Chartered has been involved in, they added.

A sale could take place before the start of the Muslim holy month of Ramadan, due to begin around July 9, two of the sources said, although one of the others said it may be delayed until after the summer.

GACA didn't immediately respond to a request for comment.

The sukuk is expected to draw significant demand from Saudi investors as it will be backed by a guarantee from the country's Ministry of Finance. Given that the kingdom doesn't issue sovereign debt, this is the closest that investors can get to holding government paper.

The last sukuk, a 15 billion riyals ten-year government-guaranteed deal priced in January 2012, was the country's largest ever local currency bond and attracted orders from investors worth 3.5-times the final amount.

"They are planning to raise the same amount and they could very easily do it," said one of the banking sources.

HSBC Saudi Arabia arranged the maiden sukuk on its own.

The kingdom's finance minister said in December that bonds would be issued in 2013 to fund construction at airports in Jeddah and Riyadh. ID:nL5E8NU0OJ ($1 = 3.7503 Saudi riyals)

(Additional Reporting by Angus McDowall in Riyadh; Editing by Dinesh Nair and Patrick Graham)

((davidj.french@thomsonreuters.com)(+971 4 362 5864)(Reuters Messaging: davidj.french.thomsonreuters.com@reuters.net))

Keywords: SAUDI GACA/SUKUK