BHG Financial, the leader in unsecured business and personal loans, and the creator of one of the largest community bank loan and product networks in the country, issued $300 million in ABS notes backed by high-quality commercial and consumer loans.
This ABS transaction is a significant milestone for BHG Financial as it’s the first BHG sponsored securitization to be rated by Fitch Ratings, Inc. (Fitch). Both Fitch and Kroll Bond Rating Agency, LLC have assigned a ‘AAA (sf)’ rating on the Class A Notes. The addition of a second rating agency and the structural iterations incorporated in BHG 2022-B highlight the firm’s commitment to innovation and focus on fulfilling shifting investor demand.
“In July of 2020, BHG Financial closed its first asset-backed securitization as the inaugural step in the process of developing a programmatic issuance program. To have come this far on our fifth ABS transaction, now rated by two highly respected agencies shows our commitment to providing the most innovative financial solutions on the market,” said Al Crawford Chairman/CEO and Co-founder of BHG Financial. “Since then, we have surpassed our expectations and have been able to position ourselves where we can continue to expand and explore new growth opportunities. I look forward to all the possibilities this funding channel will deliver.”
Credit Suisse Securities (USA), LLC acted as the sole structuring agent on the transaction and as joint bookrunner alongside BMO Capital Markets Corp and facilitated favorable execution amidst volatile market conditions. BHG 2022-B was the first BHG Financial sponsored deal to feature a prefunding account, permitting up to 25% of additional loans to be securitized during a 3-month period, subject to eligibility criteria and concentration limits.
The transaction was well received by institutional investors, with both existing investors and multiple first-time participants in the BHG Financial ABS shelf submitting orders. As a barometer of the demand for BHG Financials’ offering, the Class A Notes of BHG 2022-B were over 5.5 times oversubscribed within a short marketing time frame.
“With nearly 21 years in business, BHG Financial takes great pride in targeting and underwriting loans to a healthy borrowing base. The performance of our portfolio has allowed us to develop a deep investor base,” says Dan McSherry, Chief Financial Officer at BHG Financial. “We’re excited about the continued demand for our loan product and intend to increase quality offerings in conjunction with our strategic growth plan.”
With five transactions and over $1.7 billion in ABS issuance to date, BHG has reaffirmed its aim to scale its growth through securitized products. BHG Financials’ commitment to ongoing ABS transactions helps to bolster its liquidity position and further diversify its funding sources.