TD’s Evergreen Returns With Credit Card ABS

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Evergreen Credit Card Trust, 2022-CRT1, is preparing an issue of asset-backed securities (ABS), with two classes of notes to be issued to U.S. investors via Rule 144A and Reg S.

The transaction’s senior note class will be denominated in Canadian dollars, according to Fitch Ratings. Canadian dollar-denominated Visa and Mastercard credit card receivables from personal and business accounts provide collateral for the deal, according to S&P Global Ratings.

According to Fitch, Evergreen is a credit risk transfer operation aimed at reducing the risk weighting of credit card assets on TD Bank’s balance sheet.

While it was unclear how much the trust would issue to investors, Evergreen Credit’s previous transactions have issued amounts ranging from $428 million to $1.070 billion. The trust’s previous two deals both issued $535 million in notes, according to Finsight, a capital markets data provider.

Class A tickets receive a bonus through an 8.5% subordination of Class B and C tickets, and Class B tickets receive a 2.5% subordination of Class C tickets. enjoys a spread surplus, according to Fitch Ratings. This represents an increase of 200 basis points, compared to a 6.5% improvement on Class A certificates series 2021-1, the rating agency said.

Fitch plans to assign “AAA” ratings to Class A Notes, and “A” and “BBB” to Class B and C Notes, with a legal maturity date of July 15, 2026. S&P plans to assign similar ratings, except Class B ratings will receive an “A+” rating, and the rating agency says the transaction is expected to close on August 15.

TD Securities and JP Morgan Securities are lead underwriters in the transaction, according to Fitch. The Toronto-Dominion Bank will act as debt seller, manager and swap counterparty in connection with the transaction. Computershare Trust Co. of Canada is the issuing trustee, according to Fitch.

On average, credit card accounts have an account balance of CA$1,935 ($1,501.13). The accounts have an average credit limit of CA$29,664 and 100% of the accounts in the pool have been seasoned for at least five years, according to Fitch.

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