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Nicholas Grove is a Morningstar journalist.

Westpac Banking Corporation (WBC) on Monday said it is looking to raise $500 million via a new debt issue.

The securities, known as Westpac Subordinated Notes, are fully paid, registered, unsecured, subordinated debt obligations of Westpac and are expected to be quoted on the Australian Securities Exchange (ASX).

The notes are being offered with an issue price of $100 each, the bank said in a statement to the ASX.

"Westpac Subordinated Notes provide an opportunity for investors to diversify their investment portfolio with a simple investment product, paying regular, quarterly interest payments at an attractive yield," Westpac group treasurer Curt Zuber said.

The offer is expected to open on 23 July 2012 and consists of an offer to registered holders of Westpac ordinary shares, Westpac TPS, Westpac SPS, Westpac SPS II and/or Westpac CPS, an offer to retail clients of a syndicate broker, and an institutional offer.

The notes pay a floating rate of interest quarterly in cash. The interest rate is calculated as the 90-day bank bill rate plus a fixed margin, which is expected to be in the range of 2.75 per cent to 2.95 per cent per annum.

For example, the interest rate for a quarterly period would be 6.31 per cent per annum if the 90-day bank bill rate was 3.56 per cent per annum and the margin is set at 2.75 per cent per annum, the bank said.

The notes have a fixed maturity date of 23 August 2022, but may be redeemed earlier at Westpac's option on 23 August 2017, and each interest-payment date thereafter, or for certain taxation or regulatory reasons, subject to the prudential regulator's prior consent.

Payments are not deferrable or discretionary and the notes are not convertible into ordinary shares, Westpac said.

In a potential wind-up scenario, the notes rank for payment after senior creditors of Westpac, at least equally with all other unsecured subordinated debt with a fixed maturity date, and before Westpac hybrids and ordinary shares.