A mix of private and public tranches of securitized bonds, backed by a pool of business and consumer credit card accounts, will be sold to U.S. and Canadian investors through the Evergreen Credit Card Trust, series 2024-CRT4.
The deal is a credit risk transfer, and receivables are Canadian dollar denominated. Toronto-Dominion Bank originated the receivables, generated from personal and business accounts according to Fitch Ratings, which rated the notes, along with S&P Global Ratings.
The trust will issue notes through three tranches, all of which have an Oct. 16, 2028, according to S&P and Fitch. Toronto-Dominion Bank will buy the class A notes in a private transaction. Classes B and C will be offered to investors through Rule144A and Regulation S, Fitch said.
Class A and B notes have credit support levels representing 8.50% and 2.50%, respectively. The C class notes provide subordination support to the senior notes, according to Fitch. Class C notes receive support from excess spread, and a reserve account.
The trust will not fund the reserve account at closing, Fitch said. Should the three-month excess spread average fall to or below 4.00%, however, the trust will fund the reserve account, according to Fitch.
TD Securities and J.P.Morgan Securities are underwriters on the deal, where Toronto-Dominion also serves as seller, servicer and administrator, according to Fitch.
Evergreen 2024-CRT4 offers another layer of protection, through early amortization event triggers. The trigger events include the excess spread percentage falling below the required amount for that period, a servicer default with adverse effects on the noteholders; or if the quarterly principal payment rate falls below 10%.
Fitch noted that Evergreen 2024-CRT4's 60+ delinquency and chargeoff rates had normalized to pre-pandemic levels. Yet ongoing and healthy monthly payment rates and gross yield performance offset those performance issues.
S&P assigns AAA, A+ and BBB to the class A, B and C notes, respectively. Fitch assigns AAA, A and BBB to the A, B and C notes, respectively.
