Banker's Healthcare Group's latest asset-backed securities (ABS) sale is completely made up of consumer loans, just the second time it will do so from the BHG Securitization Trust platform.
BHG 2025-1CON will sell $297.2 million in securities to investors, through five tranches of class A,B, C, D, and E notes. All the notes have a legal final maturity date of April 17, 2036, say analysts at Fitch Ratings and Kroll Bond Rating Agency.
KBRA assigned AAA ratings to the $130 million, class A tranche. Fitch assigned AAA to the class A notes; AA- to the class B notes; A- to the class C notes; BBB- to the class D notes and BB to the class E notes. BHG 2025-1CON's capital structure includes subordination of junior note classes, a cash reserve account equaling 0.50% of the initial pool balance, and excess spread equaling 11.06%, according to KBRA.
The transaction uses a sequential pay structure, where the class A notes receive principal payments before all the subordinate notes. Each class, however, has a required overcollateralization percentage. When that percentage is reached, the next subordinate class to start receiving principal payments. If the class D reaches its required percentage, all classes will be paid pro rata.
Once the transaction reaches a pool factor of 10%, the priority of payments switches back to a full-turbo, sequential pay structure.
There is also a cumulative net default trigger on the deal. If this trigger is breached, then BHG 2025-1CON will start a full turbo amortization sequence. Should the cumulative net default situation get resolved, then the overcollateralization requirement will equal either 1.00% of the current pool balance or 1.00% of the initial pool balance or the product of overcollateralization from the distribution date prior to the breach and the pool balance as of the last day of the related collection period, whichever is greatest.
Goldman Sachs is the deal's lead underwriter, according to Fitch Ratings.
The pool is made up of 3,632 loans, with a current balance of $82,661 and a WA rate of 18.02%, Fitch said. Borrowers have a WA FICO score of 736, the rating agency said.
Pinnacle Bank and County Bank originated the loans in the pool, representing 49.91% and 50.09% of the collateral, respectively.
One aspect of the deal gives it a mixed credit outlook, which is the option to repurchase delinquent loans or substitute ineligible loans. That option is capped at 10% of the aggregate closing pool balance, which includes any defaulted loans that were sold out of the transaction, KBRA said.
