Bankers Healthcare Group returns to the securitization market to sponsor a $269.2 million in asset-backed bonds through the BHG Securitization Trust 2023-B, secured by a static pool of consumer and commercial loans extended to prime borrowers.
BHG 2023-B will issue notes through five tranches of notes, according to ratings analysts from Fitch Ratings. All of the notes are benchmarked to the three-month interpolated yield curve, according to the Asset Securitization Report's deal database, and spreads are expected to fall between 195 basis points over the benchmark on the 'AAA'-rated notes to 840 basis points on the 'BB'-rated notes.
Several managers teamed up to bring the deal to market, such as BMO Capital Markets, Capital One Securities, Goldman Sachs and SunTrust Robinson Humphrey Capital Markets, according to ASR's database.
The high quality of the pool is marked by a weighted average (WA) FICO score of 747, according to Fitch. Slightly more than half of the borrowers in the collateral pool, 54.74%, have a FICO score that is higher than 740, and just 3.06% of the borrowers have a score below 661, the rating agency said.
Another positive credit highlight is that BHG underwrites to high-income professionals. The primary obligors and guarantors have a WA income of $272,206 as of the statistical cutoff date.
Further, the loans have a WA term of 92 months, a metric that is on the decline. That term which is lower than the 99 months in the 2023-A transaction, which itself has declined from previous transactions, according to the rating agency.
Fitch expects to assign ratings of 'AAA' on 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. All of the notes have a legal final maturity date of Dec. 17, 2036.
Based on the hypothetical pool, series 2023-B has a base case default assumption of 12.07% for the commercial loans and 14.87% for the consumer loans.
The notes benefit from initial hard credit enhancement levels of 55.35%, 28.50%, 19.90%, 16.10% and 10.75% on classes A, B, C, D and E notes, respectively. Further, Fitch applied a 'AAA' rating stress of 4.0x of the base case default rate for commercial loans, and a rating stress of 4.25x on the consumer loans.
BHG 2023-B has no prefunding period, so no additional loans will be added to the trust after the closing date.
