DBRS Releases March 2013 Canadian ABS Report

DBRS has today released its Monthly Canadian ABS Report, which provides an overview of the Canadian term asset-backed securities (ABS) market for the month ending March 31, 2013. The report provides detailed information on issuance volumes, asset composition and 12-month transaction performance histories. New transactions and rating actions that took place during and after the reporting period are also summarized in the report.

The total outstanding amount of the Canadian ABS market was $29.6 billion at the end of March 2013, down 4.4% from the previous month’s outstanding amount of $31.0 billion. Regular runoff amounted to $201.9 million this month.

There were several series and classes of notes fully repaid in the month: Credit Card-Backed Investor Certificates, Series 2008-1 issued by Canadian Credit Card Trust (CCCT) and Credit Card Receivables Backed Floating Rate Notes, Series 2006-1 issued by CARDS II Trust. Despite a lack of issuance in March, CCCT, Master Credit Card Trust II and CNH Capital Canada Receivables Trust issued notes in April.

On April 22, 2013, DBRS released a press release titled “Friend, Foe or Frenemy of Canadian Housing? DBRS on Recent Developments in the Canadian Residential Mortgage Market.” In the press release, DBRS notes that the Canadian federal government has implemented changes to mortgage rules over the past few years in an attempt to alleviate the potential impact of unprecedented consumer leverage in the residential mortgage market. Many of these changes have affected consumers directly, by way of tighter mortgage insurance eligibility, while other changes have had more of a direct effect on lenders.

On April 24, 2013, DBRS published a study titled “Retail Auto Securitization in Canada: Annual Update.” The study examines recent loss performance and composition trends in securitized pools rated by DBRS in Canada over the last six years. According to DBRS, “Canadian auto securitization transactions continued to perform well in 2012, thanks to relatively benign economic fundamentals -- low interest rates and stable employment -- which have created a market that is at once competitive for sellers and attractive to buyers.”

Credit cards remain the largest asset class within the ABS market, comprising 81.6% of the market. Auto loans and auto leases declined to 10.0%, followed by equipment finance, flat at 3.3%. The ABS market composition continues to favour consumer lending, with credit card and auto loan/lease programs accounting for approximately 91.6% of the market.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.