The Toronto-Dominion Bank, which hadn’t structured a credit-card securitization in 13 years prior to 2016, is prepping its third multi-currency notes offering of the year secured by Canadian dollar-denominated card receivables.
The Evergreen Credit Card Trust 2016-3 is a revolving pool of domestic VISA and MasterCard credit-card accounts that were either originated or acquired by TD. The Canadian bank has built itself into the country’s largest card issuer through a series of Canadian-card portfolio buyouts in recent years.
The total size of the transaction is to be determined, but Fitch Ratings reports that the senior Class A notes will total US$500 million. Both Fitch and Standard & Poor’s assigned provisional ‘AAA’ ratings to the Class A tranche.
The Class B and C notes in the deal will be issued in Canadian dollars, with sizes to be determined. The B notes are rated ‘B’ by Fitch and ‘A’ by S&P, while the C notes are ‘BBB’ by both firms, according to presale reports.
(In its two prior deals, the B and C notes were issued at substantially smaller sums than the senior U.S. notes).
The trust will draw accounts from its portfolio consisting of approximately CAN$7.9 billion in existing card balances, mostly from a group of spendthrift accountholders with low utilization rates (17%) and average account balances (C$1,800) on accounts with credit limits averaging C$10,743.
More than 66% of the accounts in the pool have borrowers with FICO scores over 700, and 82% are seasoned beyond five years.
Evergreen’s pools have realized lower year-to-date annualized net losses (2.36%) compared to 3.3% for the average of six major Canadian card trusts totaling CAN$39.3 billion (including Evergreen). But those losses exclude the accounts acquired in TD’s portfolio acquisition of $3 billion in Aeroplan VISA card account balances from Canadian Imperial Bank of Commerce in 2014.
TD launched its first ABS deal since 2003 through the Evergreen platform in May, when it pieced together the 2016-1 deal that issued notes in US dollars ($1 billion) and Canadian currency ($89.93 million). TD returned in July with a US$500 million transaction (plus notes totaling CAN$45 million).
TD is underwriting the 2016-3 deal along with JPMorgan and Wells Fargo, and is expected to close Nov. 25.
