Lloyds Banking Group has completed its first issue of residential mortgage-backed securities (RMBS) in two years with a £3.4bn (US$5.1bn) transaction that attracted strong demand from investors. Yesterday's deal, the largest public offering of RMBS since the summer of 2007, helped Lloyds raise more than half of its funding needed for the year, strengthening the UK bank's balance sheet. Strong demand for the publicly offered tranche of the deal saw it increased in size from £1.8bn to £2.8bn, with more than 60% of the paper being sold into the US market. The transaction was issued through Lloyds' "Arkle" program and does not offer investors a 'put' option that would enable them to sell the paper back to the bank at a fixed price.