UK bank Lloyds is considering making its debut covered bond issue in euros, banking sources familiar with the situation said on Friday. The UK bank held a non-deal roadshow with investors earlier in January, but timing of any deal is not certain, the sources said. The banks involved in the roadshow were Deutsche Bank, LBBW and Natixis. They are expected to manage any deal, along with Lloyds itself, the sources said.

Lloyds was not immediately available to comment Covered bonds are highly-rated securities backed by pools of mortgages, which remain on the issuing bank's balance sheet. They are expected to play a big role in funding Europe's banks this year as they are relatively low cost. There has been around 28 billion euros ($39.31 billion) of covered bonds issued this month, according to data from Barclays Capital.

Copyright Reuters, 2010