The deal, which was the first securitisation backed by prime TSB and C&G mortgages issued since May 2007, was so warmly received that LBG increased the size of the publicly offered tranche from £1.8bn to £2.8bn.

In total the securitization was worth £3.4bn, with the remaining £0.6bn tranche sold privately.

The average LTV of the mortgages underlying the securitization was 65%.

In total, 60% of the paper was sold to US investors, who have been showing increased enthusiasm for UK mortgage-backed securities this year.

This was the third securitization launched by LBG in the last 12 months, and was launched through Lloyds’ ‘Arkle’ programme.

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The earlier deals were issued through a vehicle called the Permanent programme, backed by mortgages originated by LBG’s HBOS subsidiary.

The first deal of £4bn was issued last September, with a second issuance in January worth £2.5bn.

A note from analysts Execution Noble pointed out that the interest rate paid by Lloyds on its latest deal was 5 basis points cheaper than on a February transaction.

“The pricing of the RMBS deal highlights our long-standing thesis of improving costs of wholesale funding at Lloyds which we believe creates a virtuous circle,” the analysts wrote.