UPDATE 1-Australia's NAB to issue US$500 mln in hybrid tier 1

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SYDNEY, Sept 16 (Reuters) - National Australia Bank Ltd (NAB.AX) plans to issue about US$500 million in hybrid tier 1 securities to offshore investors, it said on Wednesday.

The securities will be perpetual, and non-callable for seven years, with a coupon stepping up in 2014, according to a source familiar with the terms.

The issue, to be sold in Europe and Asia, is expected to price this week, the source said.

The offer, to be issued by NAB's New York branch, is jointly managed by Bank of America, Goldman Sachs and HSBC, the source said.

Tier 1 is a form of very liquid capital that banks are required to maintain as a cushion to protect bank deposits.

It is the closest type to equity and also the most expensive form of debt for banks.

Tier 1 hybrid securities are usually rated two notches below the issuer's senior debt.

NAB's senior bonds are rated AA by S&P and Aa1 by Moody's. (Reporting by Cecile Lefort; Editing by Michael Urquhart)