The Evergreen Credit Card Trust, 2022-CFT2 expects to issue credit card secured asset-backed securities in Canadian and U.S. dollars and through the use of private and 144a mechanisms, although the amount has not been finalized by press time.
Evergreen assets have posted strong asset performance lately, especially over the last 12-months, according to a December 6 pre-sale report from Fitch Ratings. As of the October 2022 collection period, net chargeoffs were 1.26%, an improvement from 1.28% in the same period a year earlier. Delinquencies in the 60-day-plus band had dropped to a record low of 0.47% since 2014, and were down from 0.71% a year earlier, according to Fitch Ratings.
The rating agency expects to assign ratings to the three tranches of notes. The most senior tranche, the class A notes, will issue the Canadian dollar-denominated notes in a private transaction, while offering classes B and C through rule 144a in U.S. dollars, the rating agency said.
All of the credit card payment assets and ABS liabilities from the trust are fixed-rate, with no exposure to Libor or SOFR.
TD Securities and J.P. Morgan Securities were lead underwriters on the deal, with Toronto-Dominion Bank acting as seller, servicer and administrator. BNY Trust Company of Canada provides indenture trustee services on the transaction, according to Fitch.
The deal benefits from 8.50% subordination on the Canadian dollar class A notes; 2.50% on the U.S.-dollar class B notes while the class C notes are junior to the other classes.
The Canadian dollar-denominated notes have a few distinctions over the U.S.-dollar tranches, aside from being offered as private placements, according to Fitch. The notes pay interest semiannually, and the first payment is scheduled for May 15, 2023. The U.S.-dollar notes start interest payments on Jan. 17, 2023, and pay on a monthly basis.
Just about every other aspect of the deal is the same, according to Fitch. The repayment types are soft bullets under controlled accumulation. All of the notes have an expected maturity of Nov. 25, 2024, with a legal final maturity of Nov. 16, 2026.
Fitch Ratings expects to assign 'AAA' ratings to the senior, Canada-based tranche; 'A' to the class B notes and 'BBB' to the class C notes.
