I've seen that sometimes, and it have always confused me. I'd think that it (ignoring how contractions are normally written in English) really should be spelled "that'ould" or "that'ud" (or more phonetically "that'ed" / "that'wd") because I cannot understand how you'd pronounce that without at least a schwa sound between the t and the d (it's the same consonant unvoiced and voiced). More @Wikipedia
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