Bankers Healthcare Group has securitized revenues from mixed pools of consumer and small business loans for several years, but the sponsor is preparing to issue $273.3 million in notes to investors composed entirely of consumer loans for the first time.
Known as BHG-CON1, the pool is the ninth securitization from BHG and has no prefunding period, like the BHG 2023-B, so the pool will not add any new loans after the January 31 cutoff date, according to ratings analysts from Fitch Ratings.
One thing hasn't changed about previous BHG Securitization Trust deals is the prime quality of the underlying loans. Fitch notes that BHG's maintains targeted underwriting that focuses on high income professionals. Some 51.78% of the obligors have a FICO score higher than 740, while only 0.2% have scores below 661, the rating agency said. On a weighted average (WA) basis, the obligors have an income of $244,112, Fitch said.
The collateral pool has 2,701 loans, which have a WA original term of 91 months, and an average balance of $76,737, and an average rate of 17.26%. Fitch considers the latter two metrics to be high, which increases the probability of and severity of defaults. But at least the WA original term is a tick lower than the terms on the BHG 2023-B, which was 92 months, the rating agency said.
BHG is acting as servicer and administrator on the deal as well, according to Fitch, while Vervent is on the deal as the backup servicer.
The transaction will issue notes through five tranches of class A, B, C, D and E notes, according to Fitch's details about the capital structure. All of the notes have a legal final maturity of April 17, 2035.
Fitch assigns ratings of 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. Fitch also noted that classes A, B, C, D and E have credit enhancement levels of 54.7%, 30.2%, 18.4%, 13.9% and 9.4% respectively. It assigned a base case default assumption of 14.26% to the notes.
