Toronto-Dominion Bank plans to resume securitizing lines of credit with a new transaction dubbed Genesis Trust II, Series 2013-1, according to Moody’s Investors Service presale report.
The LOC product is a core retail product that TD offers in its home market. TD has sponsored a number of public and private transactions backed by LOC assets since 2000; this is its first public transaction since 2006.
The deal securitizes prime-quality lines of credit extended to obligors located in Canada and is secured by residential properties in Canada.
The LOCs originators are the Toronto-Dominion Bank and its Canadian personal and small business banking subsidiary, the Canada Trust Company.
Moody’s has assigned preliminary ratings to the deal, which is as of yet, unsized. The class A notes are rated ‘Aaa’, the class B notes are rated ‘Aa2’ and the class C notes are rated ‘A2’.
Delinquencies and losses on prior LOC transaction sponsored by TD have been within Moody’s expectation.
“There are no industry averages or benchmarks for comparison as this product is typically funded on an originator’s balance sheet,” explained Moody’s.
However, the latest deal benefits from a strong weighted average credit score of 785 and weighted average loan-to-value of 65%.
The deal also benefits from high borrower equity levels on the back of price appreciation in the Canadian housing market since the origination of the loans in the pool. According to Moody’s, high borrower equity levels are a “disincentive to default and mitigates severity in the event of a default.”
TD Securities, BMO Nesbitt Burns, CIBS World Markets, National Bank Financial, RBD Dominion Securities and Scotia Capital are lead managers on the deal.