ABS Surpasses 2021 Levels
Combined new term asset-backed securities (ABS), asset-backed commercial paper (ABCP), and covered bond issuance in Canada were $106.7 billion as of August 31, surpassing the total new deal volume of 2021, says DBRS Morningstar. Covered bond issuance year-to-date (YTD) has been significantly strong, reaching an equivalent of $71.9 billion, compared with $46.3 billion in total in 2021. The increase in Canadian covered bond supply may be attributed to issuers balancing their funding sources, the refinancing of $44 billion of maturing bonds (including early redemptions), and strong investor demand, in addition to ongoing growth in mortgage credit. YTD issuance in the Canadian term ABS market increased to $10.6 billion from $4.6 billion in the same period last year, mainly driven by $8.4 billion in new issuance backed by credit card receivables. The larger credit card ABS volume is comparable with pre- COVID-19 pandemic levels as credit card issuers, which were largely absent from the securitization market from the onset of the pandemic until the second half of 2021, continue to re-establish their presence in the market as regular issuers.