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Nicholas Grove is a Morningstar journalist.

Australian retail giant Woolworths (WOW) on Tuesday said it is seeking to raise $500 million through the sale of hybrid securities.

Woolworths said the offer of dated, unsecured, subordinated, cumulative notes at $100 each is being made as part of its ongoing capital management strategy, with the proceeds of the offer to be used for general corporate purposes.

"Woolworths is a solid cash-flow generating business with a conservative balance sheet," Woolworths finance director Tom Pockett said in a statement.

"This offer further optimises our capital structure and is expected to further support our corporate credit rating."

The notes will mature on 24 November 2036 unless redeemed before that date, Woolworths said.

Interest payments will be calculated on a quarterly basis as the sum of the 90-day bank bill rate plus the margin, which is expected to be in the range of 3.25 to 3.50 per cent, the company said.

Woolworths said it may elect to redeem the notes on the step-up date of 24 November 2016 or any interest payment date thereafter.

If notes are not redeemed on the step-up date, the margin will increase by 1.00 per cent, it said.

Morningstar equities analyst Nathan Zaia said the margin of between 3.25 to 3.5 per cent is an attractive yield for a solid business like Woolworths, which is capable of servicing the interest and redeeming the notes come the remarketing date.