Investment bank Lehman Brothers is to test the the credit crisis in the financial markets by issuing a £700 million bond secured on commercial property assets.

The bank will start marketing the debt later this month, the first such bond to be issued since the credit crunch. Although it will be marketed out of the bank's London head-quarters, it is understood to be based in commercial property assets across Europe.

Although the bank declined to comment, Philip Cropper, a finance expert with CB Richard Ellis, the world's largest property agency, said: "I imagine this will be a pool of assets that originated before the summer crisis. I am sure the bank has tested the market before formally marketing the debt, so this is quite a positive position to be in."

The pricing of the bond issue, called Windermere XIV, will be a crucial test of investor appetite. Before the US sub-prime crisis spread to Europe, debt based on top-quality assets was priced at around 20 basis points, or 0.2 percentage points, above Libor, the standard inter-bank lending rate.

Since then the market has moved to the extent that bonds based on another of Lehman's assets, the Coeur Defense office building in Paris, are being priced at about 50 basis points above Libor.

Normally, top investment banks each market about £3billion of both commercial and residential mortgage-backed securities each quarter.

Given the lack of activity on the back of the credit crunch, there is a huge backlog of debt that needs to be cleared before investment banks can loan money back to the commercial and residential property investment markets.