Diamond Resorts International has closed on a $225 million offering of bonds backed by vacation timeshare loans.
The deal, Diamond Resorts Owner Trust 2013-2, is comprised of $213.15 million of notes with an AA’ rating from Standard & Poor’s and $11.85 million of A+’-rated notes. The notes have interest rates of 2.27% and 2.62% respectively, for an overall weighted average interest rate of 2.29%. The advance rate for this transaction was 95%.
“The successful completion of this transaction is a testament to our unique, integrated hospitality platform,” David F. Palmer, president and chief executive of Diamond Resorts stated in a press release Wednesday.
He said that the transaction achieved the highest credit rating of any timeshare loan securitization since 2009.
The senior, AA’-rated notes benefit from 10.00% initial overcollateralization and the subordinated, A+’-rated notes from 5.00% initial overcollateralization. There is also an initial reserve account of 1.00% of the collateral amount, according to S&P’s presale report.
The transaction was completed in reliance upon Rule 144A and Regulation S, exemption it from registration under the U.S. Securities Act of 1933 or any state securities law.
Credit Suisse was the initial purchaser of the notes, according to S&P.
The presale report states that the transaction includes a prefunding period during which the issuer may use approximately $44.65 million of note proceeds deposited at closing into the prefunding account to acquire additional collateral. As a result, the collateral profile is subject to change. Remaining amounts on deposit in the prefunding account will be distributed as principal on the prefunding termination date