Malaysia to sell 5 bln rgt Islamic savings bonds

KUALA LUMPUR, March 10 (Reuters) - Malaysia will issue 5 billion ringgit ($1.36 billion) of three-year Islamic bonds this year, Deputy Prime Minister Najib Razak said on Tuesday.

The paper will have an annual return of 5 percent to be paid quarterly to bondholders, Najib said.

The government announced the issue as part of a 60 billion ringgit 2-year stimulus plan aimed at helping its economy weather the global economic downturn.

"Apart from providing an additional savings instrument to the rakyat (people), the bonds will provide holders with additional income," Najib told parliament.

"Bondholders will receive additional income of 250 million ringgit a year."

(Click on [ID:nISLAMIC] for more Islamic finance stories and ISLAMIC for a speed guide) ($1=3.687 MALAYSIAN RINGGIT)

(Reporting by Liau Y-Sing)