Bank of Butterfield yesterday announced that it had issued US$125 million of subordinated capital notes.

The notes, called Lower Tier II, were issued in two batches - $78 million in series A notes due in 2013 and $47 million in series B notes due in 2018.

The series A notes will pay a fixed coupon until May 27, 2008 when they become redeemable in whole at the Bank of Butterfield. The series B notes will pay a fixed coupon until May 27, 2013 when they also become redeemable in whole at the bank's option.

The A series notes were priced at a spread of 1.25 percent over the five-year US Treasury yield and the B series notes were priced at a spread of 1.35 percent over the 10 year US Treasury yield.

The notes have been rated A minus by Fitch, Baa1 by Moody's and BBB plus by Standard and Poor's.