A pool of credit card receivables is pledged to repay about (CAD)$250 million ($182.6 million) in asset-backed securities from the Eagle Credit Card Trust, 2024-1.
President's Choice Bank is the seller and servicer of the assets contributed to the pool, according to ratings analysts at DBRS Morningstar, which added that which as of March 31, 2024, the receivables pool balance comprised $2.8 billion of Mastercard credit card receivables originated by the seller.
The deal, slated to close on June 28, will issue A, B and C classes of notes through three tranches, according to the Aset Securitization Report's deal database. Overall, the Eagle portfolio has performed well, despite certain macroeconomic challenges, according to DBRS.
"Payment rates and gross yield are among the highest in Canada," for the Eagle Credit portfolio," and even though payment rates have come down from their peaks they are still elevated compared to pre-pandemic levels, DBRS said. As of April 30, 2024, the three-month average payment rate and gross yield were 63.7% and 27.1%, respectively.
The structure also calls for an accumulation period to begin at least three months prior to the notes' targeted principal distribution date.
Credit support includes subordination of 3.5% from the B and C notes, excess spread of 14% and there is a reserve account. The latter will start with a zero balance when the deal closes, then build up to 5% of the pool's invested amount, depending on the level of excess spread available, the rating agency said.
Another strength in the pool is that it is well-diversified and seasoned; about 92.4% of receivables have more than 48 months of seasoning, DBRS said.
BMO Capital Markets, CIBC World Markets and RBC Capital Markets are managers on the deal, the database said.
DBRS and Fitch Ratings both assign AAA to the A tranche; A to the B tranche and CCC to the C tranche.
