Bankers Healthcare Group is preparing to sell $396 million in asset-backed securities (ABS) to investors, collateralized by small business loans and unsecured consumer loans primarily extended to high-income professionals.
The BHG 2026-1CON is Bankers' twelfth term ABS transaction, and the fourth 144A securitization deal collateralized solely by consumer loans, and will issue five tranches of class A, B, C, D and E notes, Kroll Bond Rating Agency said.
All the notes have a legal final maturity date of June 17, 2037, KBRA said. Asset Securitization Report's deal database says
Initially, the transaction will follow a sequential repayment structure that combines the requirement for each class of notes to reach a required overcollateralization percentage before the next subordinate class begins receiving principal payments KBRA said.
Initial overcollateralization is 1.00%, KBRA said.
Based on improved management performance, Fitch Ratings' analysts estimate that the notes have a base case default assumption of 13.97%.
The notes benefit from several forms of credit enhancement, Fitch and KBRA said, with initial hard credit enhancement totaling 50.00%, 22.65%, 11.30%, 4.00% and 1.50% on classes A, B, C, D and E, respectively.
These enhancement levels are enough to cover Fitch's stressed cash flow assumptions for all classes, and Fitch applied a 'AAA' rating stress of 4.25x the base case default rate for consumer loans.
As for the consumer loans in this deal, BHG purchased the collateral loans from Pinnacle Bank of Tennessee and County Bank a Delaware-chartered bank, which originated the loans.
BHG started providing loans exclusively to licensed medical professionals but eventually expanded to lending to highly qualified and high-income professionals such as attorneys, financial advisors and accountants, KBRA said.
The BHG 2026-1CON's underlying 4,243 loans were made to engineers, registered nurses, physicians and surgeons, attorneys and so-called "other" professionals, KBRA said. Loans have an average current balance of $94,275, with a weighted average (WA) rate of 17.8%, according to Fitch.
Fitch assigns ratings of AAA, AA-, A-, BBB- and BB to classes A, B, C, D and E, respectively. KBRA, for its part, assigns AAA to the class A notes.
