A revolving pool of general-purpose, Walmart-branded Mastercard credit card receivables will secure $250 million in asset-backed securities (ABS), the first term ABS deal from Canvas Cards.
The deal, Canvas Cards Trust, series 2025-1, is a Canadian-dollar deal. The private placement deal will issue three tranches of fixed-rate notes that have a legal final maturity of June 16, 2031, according to analysts at Fitch Ratings. Undivided co-ownership interests make up the collateral underpinning the deal.
The deal features a reserve account, and like peer credit card ABS deals with that feature, Canvas Cards 2025-1 traps cash in the account when the percentage of excess spread falls to 8.0% or below. But there is one difference: Canvas' trigger threshold is higher than the typical 4.0% threshold of most other peer transactions, Fitch said.
The deal also differs from peer transactions with a seller interest that equals 12.75% of the series 2025-1 invested amount, higher than the 7.0% seen in most peer transactions.
While most of the deal's attributes are positive or neutral, Fitch noted that the ongoing trade conflict between the U.S. and Canada could saddle certain Canadian products with tariffs on cars, aluminum products and steel. Should this undermine business investments and lead to job losses and inflation, it could impact the budgets of lower-income households.
RBC Dominion Securities and BMO Nesbitt Burns are the deal's placement agents, Fitch said. Fairstone Bank of Canada is the deal's seller, servicer and financial services, according to Fitch. NTT Data Canada is on the deal as the backup servicer, Fitch said.
The rating agency noted that as of Canvas' March 2025 collection period, 60+ day delinquencies and net chargeoffs decreased to 2.1% and 5.67%, respectively, from 2.58% and 6.72% the year before.
Fitch assigns AAA, A and BBB- to classes A, B and C notes, respectively, while Morningstar DBRS assigns AAA, A and BBB to the A, B and C notes.
