Canadian Tire Bank is preparing to market C$500 million ($370.9 million) in asset-backed bonds to investors, from a pool of revenue secured by Mastercard and retail credit card receivables that Canadian Tire Bank had originated.
Ratings analysts from S&P Global Ratings say that Glacier Credit Card Trust 2023-1's receivables are generally weaker in credit quality—and that they exhibit a higher loss rate, plus lower yield and lower payment rate—compared with the Canadian CCQI from its Feb. 23, 2023 credit card asset-backed securities (ABS) review.
The Bank of Nova Scotia is the Bank account provider on the deal, according to S&P.
S&P expects an 8.50% base-case loss rate on the transaction, a 19.00% base-case payment rate, and a 17.00% base-case yield assumption.
Total credit enhancement on the notes amounts to 13.50% and 7.00% on the senior and subordinate classes of notes, respectively, the rating agency said. That compares with 12.50% and 6.00% on similar classes from the GCCT 2022-1 transaction, S&P said.
In another layer of credit protection, the deal has a 7.00% dedicated overcollateralization amount, which was increased from 6.00% of the series invested amount.
The rating agency assigned ratings of 'AAA' to the senior notes and 'A' to the subordinated notes. All of the notes have a legal final maturity date of Sept. 20, 2031.
