The 2019 bank credit-card ABS market remains a strictly Canadian affair with a new issuance planned through Toronto-Dominion Bank’s Evergreen master trust.
With Evergreen Credit Card Trust Series 2019-1, TD Bank will issue three classes of U.S.-dollar denominated backed by monthly consumer and small-business receivables from Visa and Mastercard accounts originated by the bank, according to presale reports from S&P Global Ratings and Fitch Ratings.
TD Bank joins Bank of Montreal and Royal Bank of Canada this month in launching 2019 U.S.-market securitizations of their Canadian-dollar credit-card receivables. The bank-card asset-backed field is still awaiting a U.S.-based institution to step up with a sponsored deal.
Evergreen 2019-1's capital stack includes a floating-rate Class A tranche with preliminary AAA ratings; a single-A rated Class B fixed-rate tranche and a triple-B Class C fixed-rate note offering.
Note sizes are to be determined across all the classes. The transaction is the first issuance out of the Evergreen trust since TD Bank sold $750 million in Class A notes last July with a coupon of 35 basis points over one-month Libor.
The Series 2018-2 transaction also included subordinate Class B and C notes similar to 2019-1's structure, although those were issued in Canadian currency and paid on a semiannual basis versus the monthly payments to be made on the Series 2019-1 subordinate classes.
The Class A notes will benefit from 6.5% credit support. The Series 2019-1 notes will pay interest only for two years, with fully amortizing principal and interest payments taking place between 2021 and 2023.
On Jan. 11
Other 2018 Canadian card issuers selling asset-backed bonds in the U.S. market include Bank of Nova Scotia and Canadian Imperial Bank of Commerce.
Like its Canadian banking peers (which involve seven other active bank-card master trust platforms), TD Bank’s card securitizations are conservatively underwritten with prime-quality, well-seasoned accounts with light utilization.
Over 69% of the cards belong to borrowers with FICOs above 700, and who have had their accounts for over five years (96% of the pool). The accounts on average carry balances of CAN$2,076 on CAN$14,768 credit limits. The monthly full-balance payment rate is 50.34%, a consistent level since 2013 for the trust, with minimal annualized net losses of 2.19%.
