ANZ priced a A$750 million, 10.5-year, non-call subordinated floating rate note issue, with a non-call period of 5.5 years, at 220 basis points over the 90-day bank bill rate yesterday. The deal, launched on Tuesday, will qualify as transitional, lower tier II capital under Basel III.  At the same time, AMP Bank launched its own transitional, lower tier II capital issue. AMP Bank is seeking to raise A$100 million for 10 years (with a non-call period of five years) but no indication was given of the credit spread over the bank bill rate that would be paid.Both subordinate debt issues follow a A$950 million issue by NAB on November 21 and come just ahead of the implementation of the new Basel III capital adequacy rules on 1 January. After this date, the issuing of Basel III-compliant, lower tier II paper is likely to be considerably more expensive for the banks.Just the day before the NAB issue, Barclays issued US$3.0 billion of Basel III-compliant, lower tier II capital for a period of 10 years, and paid 590 bps over swap to do so.  However, New Zealand's Kiwibank is currently in the process of raising NZ$150 million of such debt from retail investors and will pay just 277 bps over bank bills, for capital that may be called after five years.This may say something about the risk tolerance of retail investors in New Zealand. Alternatively, it may signal that Australian banks will aim any further issuance at retail investors, as they have done with their additional tier I capital issues this year. That said, even the Barclays issue was largely taken up by retail investors. Institutional investors cannot accept the risk of being wiped out ahead of shareholders, if the bank is deemed to be non-viable by regulators.Meanwhile, there is still time for CBA and Westpac to launch their own transitional, lower tier II capital issues. Westpac has A$660 million of such bonds maturing in April 2013.