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.