Clifford Chance (CC) has secured a trophy finance mandate opposite Sidley Austin that could open the floodgates for US lenders to tap Europe's €1.6trn (£1.08trn) covered bond market.

The City giant is advising under-writers ABN Amro, Barclays Capital (BarCap) and Deutsche Bank on the closely-watched mortgage-backed issue by Sidley client Washington Mutual.

The trophy mandate, expected to see an initial €1bn (£680m) issue kicking off a €20bn (£13.6bn) fund-raising programme, is the first attempt by a US lender to tap Europe's fast-expanding covered bond sector.

The model, which was pioneered in Germany and Spain, allows issuing banks to obtain higher credit ratings by giving investors recourse to the issuer's balance sheet in the event of a default.

If well received by investors, CC would be in prime position to secure a string of mandates as other US mortgage lenders plot similar deals in Europe.

CC capital markets partner Debashis Dey led the deal out of the firm's Dubai office, having been instructed this April while still in London, with partner Jerry Marlat leading out of New York.

Sidley London finance partner Michael Durrer, who specialises in mortgage-backed deals, advised Washington Mutual, one of the US' largest lenders.

CC was instructed having advised Nationwide Building Society on a pioneering UK covered bond programme, while the firm has also advised ABN and BarCap on similar mortgage-backed deals in Europe.

The market for UK-originated covered bonds has quickly grown in importance for finance lawyers since HBoS issued its first covered bond in 2003 .

The Washington Mutual deal has also been cited for an unusual structure that allows mortgages in the underlying portfolio to be exchanged.

Dey told Legal Week: "If this is successful – and the banks believe it will be – this transaction may create an appetite for covered bonds within the US, which does not exist at the moment. We could be on the cusp of a brand new asset class."

CC already has another under-writer mandate under its belt for a US issuer, scheduled for October. The undisclosed bank has instructed Allen & Overy partner Howard Goldwasser.

Linklaters structured finance head Julian Davies backed predictions that the sector would grow. He commented: "On the Continent there has been a lot of focus on covered bonds and the US interest is very good for the market.

"This is an interesting product area. There will not be hundreds of issues but they will be high profile and very large."