Royal Bank of Canada has issued $1 billion of subordinated debentures, it announced today.

According to the bank, the notes bear interest at a fixed rate of 4.84% per annum (paid semi-annually) until March 11, 2013, and at the three-month Banker’s Acceptance Rate plus 2.00% thereafter until their maturity on March 11, 2018 (paid quarterly). The issue is expected to close on March 11, 2008, it said in a release.

The bank says it may, at its option, with the prior approval of the Office of the Superintendent of Financial Institutions Canada, redeem the Notes in whole at any time, or in part from time to time, on not less than 30 days and not more than 60 days notice to the registered holders.

If the Notes are redeemed prior to March 11, 2013, the redemption price will be the greater of the Canada Yield Price and par. The Notes are redeemable on and after March 11, 2013 at par. The Canada Yield Price is the price which would provide a yield from the redemption date to March 11, 2013 equal to 0.425% plus the yield which non-callable Government of Canada bond would carry from the redemption date to March 11, 2013.

According to the bank, proceeds of the issue will be added to the bank’s general funds. No further information was provided on how the funds will be used.