In its first deal of 2024, the Credabl ABS Trust, series 2024-1, will issue (AUD)$350 million ($235.1 million) in asset-backed securities, with a pool of revenue from loans to Australian medical and healthcare professionals.
Specifically, the portfolio pool is comprised of practice premise—or commercial real estate—equipment, practice purchase, fixture and fittings and auto loans, according to ratings analysts at Moody's Ratings.
Credabl ABS will issue the debt through eight tranches of classes A through G notes, which have an expected May 2045 legal final maturity date, according to Moody's. Among the deal's credit strengths is the pool of borrowers. More than 91.7% of the portfolio loans were extended to dentists, general medical practitioners or veterinary surgeons, or businesses guaranteed by those types of professionals. These are considered prime obligors with high incomes compared with other Australians.
Also, commercial real estate secures 35% of the loans; equipment secures another 24% and vehicles secure 3%. Also, the deal features excess spread, to a target of 0.5% of the initial invested amount.
The notes have a stochastic recovery model, which in this case is a cash flow model that includes the priority of interest payments and principal, liquidity, the impact of portfolio yield, portfolio amortization and hedging, Moody's said.
Yet there are some challenges to the notes' credit performance, according to the rating agency. Credabl has a limited track record, as the company had started loan originations in 2018. Also, while the collateral pool has 1,429 obligors, is relatively low compared with other commercial ABS securitizations, the rating agency said.
Also, balloon loans account for 68.9% of the portfolio, and 49.3% of the portfolio balance.
On average, the loans have a balance of $240,511, and on a weighted average basis they have a remaining term of 3.96 years, and a portfolio yield of 7.76%.
Moody's assigns ratings of Aaa to the class A notes; Aa2 to the class B notes; A2 to the C tranche; Baa2 to tranche D; Ba2 to the E tranche; and B2 to the class F notes.
