UPDATE 1-Toyota to sell Islamic bonds in Malaysia

(Updates with Toyota statement, details)

KUALA LUMPUR, May 12 (Reuters) - A financial arm of Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) will issue 1 billion ringgit ($310.8 million) of Islamic bonds in Malaysia, the first Islamic debt by the world's biggest automaker, the unit said on Monday.

The Malaysian-based UMW Toyota Capital Sdn Bhd (UMWTC) said it would use the proceeds for its working capital and capital expenditure.

"This financing exercise is consistent with UMWTC's push to develop the Islamic financial services market with innovative Islamic vehicle financing plans," it said in a statement.

The company said it would issue commercial paper and medium-term notes with maturities of seven years. The first issue is due to be completed next month.

Bank of Tokyo-Mitsubishi UFJ and Malaysia's CIMB Investment Bank (BUCM.KL: Quote, Profile, Research, Stock Buzz) are joint lead arrangers and lead managers, it said.

In Japan, Aeon Credit Service Co Ltd (8570.T: Quote, Profile, Research, Stock Buzz), a consumer credit company affiliated with retail group Aeon Co Ltd (8267.T: Quote, Profile, Research, Stock Buzz), has already sold Islamic bonds, and Toyota's planned issuance should help the Japanese Islamic bond market to grow, the Nikkei business daily reported on Monday. (Reporting by Jalil Hamid in Kuala Lunmpur and Rika Otsuka in Tokyo; Editing by Chris Gallagher and Will Waterman)