Mellon Bank is readying a $500 million deal backed by insurance premium finance loans, co-managed by Deutsche Banc Alex. Brown and Mellon's inhouse investment bank, Mellon Financial Markets, according to an S-1 filing with the Securities & Exchange Commission.
Assuming no one beats Mellon to market, this deal will be the third insurance premium loan securitization shown to investors this year, following last week's $400 million deal from Premium Financial Services.
Mellon's deal is scheduled to price next week.
Rather than signifying a trend, this relative flood of term deals (compared to no premium finance deals in the last three years) is attributable to the refinancing of securitizations brought to market in 1996.
"Two of these three deals are refinancings while the third (PFS), who was previously a commercial paper issuer, is now accessing the term asset-backed markets," said Tom Currie, a director in structured finance at Standard and Poor's. "I wouldn't call one deal (PFS) a trend, but it is possible that, as these insurance premium loan originators continue to grow, we will see more of them access the term markets to expand their sources of financing beyond the CP market."
PFS's one-part, five-year, triple-A wrapped deal priced at 33 basis points over the one-month Libor.
Mellon's deal is structured in three parts, with a triple-A-rated A-class worth $450 million, and a single-A-rated B-class worth $20 million, and $30 million in unrated collateral interest.
The obligor pool is made up of more than 29,000 accounts. The loans were originated by AFCO, an insurance premium finance company and wholly owned subsidiary of Mellon Bank.