The large Canadian bank issuers are still taking advantage of the strong U.S. investor demand for credit card ABS, a Standard & Poor’s report released today said.
These banks have completed more than $4.16 billion in cross-border credit card ABS issuance year-to-date. This number excludes the most recent Royal Bank of Canada deal, which priced Sept. 25, under its Golden Credit Card Trust, where the U.S. tranches amounted to $1.2 billion.
The Canadian cross-border deals represent roughly 60% of new credit card ABS issuance from Canadian-domiciled sellers, S&P said.
Both Royal Bank of Canada via its Golden Credit Card Trust and CIBC through its CARDS II Trust have completed cross-border series this year. S&P analysts think that other large Canadian bank issuers will probably look at this funding option if they can achieve relative cost savings or diversify their funding base.
In cross-border deals, the receivables securing the notes are Canadian-dollar denominated. But, the notes are U.S.-dollar denominated. The issuance sizes are reported as the Canadian dollar equivalent using each deal's currency swap rate, S&P analysts explained.
In the domestic market, smaller Canadian issuers have also been active this year after being inactive in 2011. Both National Bank of Canada through its Canadian Credit Card Trust and Canadian Tire Bank via its Glacier Credit Card Trust originated new transactions in the second-quarter.
S&P said that sellers with U.S. parents have either pulled back or sold their Canadian credit card portfolios. Analysts expect no further issuance from Capital One Bank, from the former Citi Cards Canada, the former MBNA Canada Bank and the former Sears Canada.