Premium Financing Specialists Inc., a provider of insurance premium financing, finished off its first term securitization last Wednesday via the lead of Banc One Capital Markets, coming in two basis points from initial guidance.
The deal priced on the heels of an American International Group (AIG) premium finance deal which was pulled in early in May (see ASR 5/7/01). Rumor has it another deal from a different issuer will be announced shortly.
PFS's $400 million transaction was structured in one triple-A-rated tranche, featuring a 100% surety wrap from MBIA, plus an additional 5% of overcollateralization. The five-year weighted average deal priced at 33 basis points over one-month Libor.
The issuance vehicle, PFS Financing Corp., is backed by over 100,000 obligors, with balances averaging $6,800 in size. The loans are then used to pay the insurance premiums for the entire year up-front.
"While most companies have to pay their insurance premiums in a lump sum once a year, firms like PFS make a loan to help the commercial entity spread out their payments on a monthly basis," explained Alex Roever, head of ABS research for Banc One. The issue is scheduled to settle May 31, 2001.
Kansas City-based PFS has historically been an active participant in the U.S. asset-backed commercial paper market.