ME Bank will press on with a Basel III compliant tier two hybrid capital raising, aiming to raise a minimum of A$150 million of tier two capital with notes should be rated Baa2 by Moody's Investor Service. ME Bank's senior debt is rated A3 by Moody's, one notch above the BBB+ rating assigned by Standard & Poor's.  A spread of 280 basis points to the three month swap is the rough guide to pricing the bank is looking for after a recent roadshow.Conversion of hybrids to ordinary shares will be linked to a book value test, a first for the local market.Institutional investors have proved to be keen investors in tier two issues this year, despite the potential for coupon payments to be deferred (on account of the solvency test) and the use of a non-viability trigger, which can result in the tier two capital being converted into ordinary equity or written-off. Just over $2 billion of tier two capital notes has been issued in the wholesale market this year.