Suncorp is to raise $500 million with a note issue, which it will use to replace some of its convertible preference shares and for general funding.

The issue of subordinated notes will qualify as Tier 2 capital, unlike the convertible preference shares, which are Tier 1 under the Australian Prudential Regulation Authority’s standards.

It will allow the group to refinance $735 million of preference shares issued in 2008. 

Convertible preference shareholders may be able to buy the new notes or wait until June, when Suncorp intends to pay out their shares in cash.

The notes will be listed on the Australian Securities Exchange and mature in November 2023.