BHG Financial Marks A Milestone With Its First Consumer-Only $273M ABS Transaction

BHG Financial, a leading provider of small business and unsecured personal loans, has recently sponsored its ninth asset-backed securities (ABS) transaction, BHG 2024-1CON, with a closing value of $273.3 million on March 25, 2024. This marks a significant development for the company as it is the first transaction to be fully backed by consumer loans. Since launching its securitization program in 2020, BHG Financial has successfully closed $2.9 billion in cumulative securitization volume, with previous transactions comprising a mix of small business commercial and consumer loans.

Albert Crawford, Chairman/CEO and Co-founder of BHG Financial, expressed satisfaction with the market's response to their first entirely consumer loan issuance, noting that it was oversubscribed in less than a day. This enthusiasm from Wall Street underscores the high quality of BHG's loan origination team and predictive credit models. The transaction received an AAA (sf) rating for its Class A Notes from both Fitch Ratings, Inc. and Kroll Bond Rating Agency, LLC, highlighting the strong confidence in the quality of these financial instruments.

Truist Securities, Inc. played a pivotal role as the sole Structuring Agent for this transaction and served as Joint Bookrunner alongside BMO Capital Markets Corp. and Goldman Sachs & Co. LLC. The deal also saw participation from Co-Managers FHN Financial Securities Corp., Regions Securities LLC, and Capital One Securities, Inc.

The transition to an all-consumer loan structure was well-received by investors, generating over $1.5 billion in collective orders across the capital stack and attracting the most unique purchasers in any of BHG's transactions to date. Dan McSherry, Chief Financial Officer at BHG Financial, highlighted this achievement as a testament to BHG's strong position in consumer funding across all channels.

The oversubscription rates were impressive across all five tranches of notes, with Class A notes reaching a 6x oversubscription and Class C notes achieving a 9x oversubscription. The transaction priced at a yield of 7.041%, benefiting from positive deal-related technicals and a supportive market backdrop that led to spread tightening of approximately 34 basis points from initial price talk.

About BHG Financial: Established in 2001, BHG Financial has been at the forefront of offering innovative financial solutions to professionals and financial institutions across the United States. Having originated over $18.5 billion in loans, the company prides itself on providing flexible financing options, streamlined processes, extended loan terms, and personalized service that distinguish it from competitors. BHG Financial also serves over 1,600 national banks through its Institutional Network by offering high-quality assets via its advanced loan delivery platform along with premium regulatory services. Partially owned by Pinnacle Bank (PNFP), BHG Financial operates out of Fort Lauderdale, FL, and Syracuse, NY. The company rebranded from Bankers Healthcare Group to BHG Financial in 2021 to reflect its growth trajectory and commitment to expanding its range of services.