TEXT-S&P comments on Canadian consumer-related ABS ratings
Dec 18 - Standard & Poor's Ratings Services today said that its ratings on outstanding Canadian-related asset-backed securities (ABS)--specifically auto loan and credit card ABS--are mostly unaffected by the recent rating actions it took on various Canadian financial institutions. Standard & Poor's maintains ratings on more than C$10.5 billion of outstanding Canadian auto loan and credit card ABS transactions. When rating credit card securitizations, we consider the originator's ability to continue generating and transferring receivables to the trust (purchase rate assumption), which is partly reflected in the unsecured credit rating on the originator. However, we affirmed the 'AA-/A-1+' ratings on Royal Bank of Canada (originator for Golden Credit Card Trust) and Toronto-Dominion Bank (originator for Gloucester Credit Card Trust). In addition, although we did downgrade National Bank of Canada (originator for Canadian Credit Card Trust) by a notch to 'A-/A-2', the rating remained in the same rating category. As a result, there is no impact on our purchase rate assumptions or our Canadian credit card ABS ratings. The downgrade of National Bank of Canada ('A-/A-2') triggered under the Canadian Credit Card Trust documents certain replacements requirements within a specified remedy period necessary to maintain 'AAA' ratings under our counterparty criteria as they relate to commingling risk and bank accounts. However, National Bank of Canada stated its intention to amend the transaction documents within a specified remedy period. Standard & Poor's will review any proposed amendments to ensure they are consistent with our counterparty criteria for 'AAA' rated securities.
© Thomson Reuters 2016 All rights reserved.