Mellon Bank is gearing up to issue its fourth transaction backed by insurance premium finance loans originated by its AFCO subsidiary, according to an S-1 filing with the Securities and Exchange Commission.

Mellon issued its first insurance premium deal in 1996. This deal marks the first time Citigroup Global Markets will be leading an AFCO transaction, said Steve Cobain, president and CEO of Mellon Financial Markets, Mellon's in-house investment bank. The two preceding deals in 2001 and 2002 were led by Deutsche Bank Securities. Credit Suisse First Boston led the 1996 debut. Mellon Financial will act as co-manager as it has on past deals.

The size of the upcoming deal has yet to be determined, Cobain said, adding that it will be at least as large as the $500 million deal done in 2001. The new issuance is essentially a refinancing of the 2001 transaction, which was a three-year revolver with a soft bullet structure.

"We have been accumulating on the balance sheet; on June 15, the transaction will be fully accumulated and paid out," Cobain said.

The bank is taking a more investor-friendly approach this time around by creating a note issue trust to bolster the existing master trust.

"The master trust will issue one certificate down to the note trust, which will in turn issue notes to investors," Cobain said. "We are looking to get broader ERISA eligibility in an effort to attract more investors."

Mellon has no immediate plans for new issuance beyond the upcoming transaction. However, the 2002 deal will mature in 2005 and would be a likely candidate for refinancing, Cobain said.

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