Hilton Grand Vacations has increased credit enhancement levels for its third timeshare loan securitization, according to a presale report from Fitch Ratings.

Hilton Grand Vacations Trust 2017-A is a $350 million, two-note structure backed by more than 16,000, prime-borrower timeshare loans representing the company’s third overall asset-backed transaction since 2013.

Fitch has assigned an early ‘AA’ structured finance rating on the Class A notes totaling $291.07 million, and ‘BBB’ to the Class B notes with a face value of $58.93 million.

The loans in the collateral pool of an aggregate loan balance of $375.1 million, which is identical to Hilton’s previous transaction in 2014.

What is different this time is the CE applied to the deal. The Class A notes are supported with 19.75% CE, involving 16.5% subordination a 1.25% reserve account and 2% overcollateralization. That is an increase from the 2014-A transaction that had 16% CE for the Class A notes.

The expected excess annual spread is 7.82%, down from 9.18% in the previous transaction.

The 10-year timeshare loans, originated by Hilton Resorts Corp., were issued to borrowers with a weighted average FICO of 742 and have an average balance of $22,072.

Cumulative gross defaults are projected at 11%, based on current levels of 7.66% in the 2013-A transaction and 6.77% in the 2014-A deal.

Deutsche Bank was lead underwriter.

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