* Russia issues two tranches of dollar Eurobonds
* Raises $3 billion, sees demand exceeding $6 billion
* Yields outweigh sanctions-related risks - market players
By Andrey Ostroukh, Sujata Rao and Kira Zavyalova
MOSCOW/LONDON, June 20 (Reuters) - Global bond investors showed strong demand for Russia's new Eurobond on Tuesday, as the yields offered by Moscow eclipsed political risks, including signs that Western sanctions could be about to get tighter.
The finance ministry offered a two-tranche Eurobond worth $3 billion and order books had topped $6.6 billion, a market source familiar with deal details told Reuters. The official release is due later on Tuesday.
The deal - and investors' enthusiasm - comes just days after the U.S. Senate voted to impose new sanctions on Russia, extending curbs put in place in 2014 to punish Moscow for its role in the Ukraine crisis.
But Russia is celebrating its victory over restrictive geopolitics by selling Eurobonds for the second year in a row. Foreign money managers, including U.S. investors, showed "big interest", Andrey Kostin, the head of Russian state-run bank VTB told reporters in London.
He described the bond as a "normal market deal"
Itself under U.S. and European sanctions, VTB is acting as the sole book runner for the Eurobond issue.
"So far the investment world has decided that (sanctions are) not a significant factor especially since it's fixed income and there should be significant returns," Kostin said.
There is huge investor demand for high-yielding securities.
Russia's bond comes a day after Argentina - with a credit rating well below Russia's - debuted on the so-called "century bond" market with $2.75 billion of 100-year debt, just over a year after emerging from its latest default..
Raising $1 billion in a 10-year sovereign Eurobond issue, Russia set final yield guidance at 4.25 percent, nearly twice as high as 2.17 percent offered by 10-year U.S. Treasuries.
Yield guidance on its 30-year bond was 5.25 percent
Some investors reckon the sanctions may even have boosted the market for Russian Eurobonds, especially as economic sanctions kept Moscow out of international bond markets in 2014 and 2015 and reduced the supply of Russian hard currency debt.
Russia's rock-bottom public debt levels are also attractive to investors.
"We think the pricing is fair on both tranches, it's good timing for Russia to issue as despite low oil prices there is access to cheap financing. The market thinks their fiscal stance is sustainable," said JC Sambor, deputy head of EM fixed income at BNP Paribas Investment Partners in London.
Vladimir Miklashevsky, an economist at Danske Bank said however: "Yields are interesting but not as attractive as they used to be two weeks ago amid fears of new sanctions."
With the sanction pattern generally unchanged from 2016, a Russian deal remains off-bounds for several Western banks and asset managers. In early 2016, some U.S. banks were advised not to help Russia launch the issue.
A couple of U.S. banks did not reply to Reuters requests for comment, while a chief economist at one of the U.S. banks said he was not allowed to speak on the matter, even off-record.
An investor at a German asset manager said by email his fund would not participate in the primary market.
"The reason is more compliance related, since VTB as a sole book runner is a sanctioned entity in the EU, this will make an investment in the primary market a very complicated task," the person said, speaking on condition of anonymity.
He said, however, that the fund may consider buying the Eurobonds on the secondary market once trading started.
Additional reporting by Elena Fabrichnaya in Moscow and Dasha Afanasieva in London; Editing by Janet Lawrence