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TD Bank 3rd Canadian card issuer to tap US ABS market in 2019

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 RBC priced a US$550 million issuance of triple-A rated Class A notes from its Golden Gate Credit Card Trust and BOM – via joint arrangement with JPMorgan and Citigroup – closed on a $476 million transaction of three classes of notes on Jan 16. The $450 million Class notes issued from BOM’s Master Credit Card Trust II platform consisted only of Mastercard account receivables.

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%.

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