It is the first such deal for the owner of the Halifax since July 2007, and other UK lenders have also been out of the market.

One City analyst said it was a small bit of good news for a bank that is raising £4bn in a rights issue.

Europe's mortgage-backed bond market seized up after a crisis in the United States subprime housing market prompted a global credit crunch last August, as investors shunned complex securities even where underlying credit quality remained good.

Bond investors such as banks, conduits and structured investment vehicles (SIVs) retreated after facing their own funding problems.

HBOS said it had responded to interest from investors and placed the bonds with seven institutions.

The bonds, sold through HBOS's Permanent programme, will pay 85 basis points more than benchmark borrowing costs. The AAA-rated bonds have an average duration of 3.64 years. Spreads on such bonds before the credit crunch were typically 10-15 basis points above costs, but then soared. Recently there has been a sharp correction in spreads.