Suncorp Group intends to issue a new perpetual, subordinated, convertible, unsecured security to create eligible Additional Tier 1 capital. The company said, in announcing the Suncorp Capital Notes 2 offer yesterday, that it aims to raise A$250 million "with the ability to raise more or less". The Capital Notes 2 securities are expected to be quoted and tradable on the Australian Securities Exchange. Distributions will be floating rate, discretionary, non-cumulative, expected to be fully franked and paid quarterly. The distribution rate will be calculated on a quarterly basis as the sum of the 3-month bank bill rate plus a margin.The margin will be determined following the bookbuild on 30 October and is expected to be in the range of 3.65 to 3.85 per centThe proceeds are expected to fund the capital needs of one or more regulated entities within the Suncorp Group and for "general corporate and funding purposes". Eligible holders of the convertible preference shares issued by Suncorp in 2012 (referred to as CPS2) may apply to reinvest all or part of their CPS2 in Capital Notes 2 under the reinvestment offer.The offer comprises:•    an institutional offer;•    a broker firm offer made to Australian resident retail and high net worth clients of syndicate brokers;•    a reinvestment offer made to eligible CPS2 Holders; and•    a securityholder offer (should it proceed) made to eligible securityholders.Full details of the offer along with the terms of Capital Notes 2 are set out in a prospectus, lodged yesterday with the Australian Securities and Investments Commission and the ASX. A replacement prospectus will be lodged on 31 October, after the margin is set.UBS has been appointed as arranger and joint lead manager.The other joint lead managers are: ANZ Securities, Morgans, National Australia Bank and Westpac Institutional Bank.In March this year, Suncorp went to the Australia-NZ capital markets to sell A$250 million in capital notes that will qualify as tier one capital. At that time Suncorp said the margin was expected to be in the range of 4.10 per cent to 4.30 per cent over the three month Bank Bill Rate, which was around 180 basis points.