Westpac has launched an issue of subordinated notes, seeking to raise A$500 million in tier two capital. The notes, which will be listed, will pay between 2.75 and 2.95 per cent over the 90-day bank bill rate.This is Westpac's second hybrid issue this year. In March it raised $1.2 billion through an offer of convertible preference shares, which qualified as tier one capital.The margin on the convertibles, which are lower down the capital structure, was 3.25 per cent over the 180-day bank bill rate.Notes in the latest issue have a fixed maturity of August 2022 but may be redeemed at Westpac's discretion in August 2017.Interest payments will be made quarterly and are not deferrable.