KBRA Affirms A- Issuer Rating for Computershare Trust Company, N.A.

5 Dec 2023   |   New York


KBRA affirms the issuer rating of A- for Computershare Trust Company, N.A (CTCNA), headquartered in Canton, MA. The Outlook for the rating is Stable.

Key Credit Considerations

CTCNA successfully managed the integration of Wells Fargo Corporate Trust Services, acquired in November 2021, including the realization of synergies within the larger group, the retention of key personnel, and maintaining its position as one of the top providers of U.S. corporate trust services. CTCNA has a highly diversified business model with broad product/service offering and low concentration risk. The company’s fee driven business model focuses on EBITDA growth and resiliency. CTCNA benefits from relatively stable, capital light, and recurring fee-based revenue streams. The majority of revenues are typically derived from trust and custody fees driven by sizeable third-party assets under custody and administration (AUA). Over the last two years, the company has benefitted from higher interest rates which is reflected in substantial increase of margin income. CTCNA’s business model is generally low risk with key risk stemming from operational activities. Leverage and coverage are expected to remain at very conservative levels over the medium term, recognizing there can be some variability in EBITDA. CTCNA’s balance sheet strength, with sizeable cash levels and a large amount of equity capital, enhances its credit profile. KBRA considers CTCNA’s equity level as conservative in the context of the institution’s risk profile.

Rating Sensitivities

Given the Stable Outlook, an upgrade is not expected over the next one to two-year time frame. Over the longer term, there is potential for upward rating momentum if management achieves additional AUA growth and diversification while maintaining conservative leverage metrics. In the event of an unforeseen decline in AUA or other financial issues which result in lower fee generation and cash flow, pressure on ratings could ensue. That said, KBRA recognizes the resiliency of trustee and custodian operations compared with many other types of financial institutions. Materially higher-than-expected leverage could negatively affect the rating.

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A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1002786

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