THIS year's powerful market performance has done little to dampen retail investor demand for hybrid securities.
Westpac has more than doubled the size of its latest issue following strong interest from small investors.
After saying last week it expected to raise $500 million in a hybrid issue, Westpac said on Wednesday it had increased the size of the deal to $1.25 billion.
"The offer has received very strong demand from retail clients," the bank said.
There was a flurry of hybrid issues last year, through which about $7 billion was raised.
Hybrid shares pay a set interest rate that usually tracks the price of debt, and after a set period they get converted into ordinary shares.
Their bond-like features and the predictable yield make them attractive to retail investors when markets are choppy.
The strong interest in Westpac's offering shows hybrids remain attractive to small investors in a rising market, too.
The notes offer a quarterly distribution rate calculated as the 90-day bank bill rate plus a fixed margin. Westpac said the margin would be 3.2 per cent - at the lower end of its initial guidance last week.
While investors have embraced hybrids as a reliable source of income in volatile times, the corporate regulator has warned that the products are often complex and riskier than corporate bonds.
It has also stressed that hybrids are subordinated to other forms of debt and are unsecured, which means investors would be at the back of the queue if the issuing company failed.
The Westpac notes, which will convert to equity within eight years, qualify as tier one capital under the new Basel III banking rules.
Westpac has $1.04 billion of hybrid notes due to be redeemed in September this year and $910 million due next September.