The lodging industry is getting another infusion of securitization capital, as sponsor Hilton Resorts prepares to issue $415.3 million in asset-backed securities to investors, collateralized by a security interest in a pool of vacation ownership interests.
Hilton Grand Vacations Trust 2025-3EXT includes a prefunding period that ends in June 2026, and in that window the transaction can purchase more receivables, if the assets meet certain requirements, according to Moody's Ratings.
The transaction will sell notes to investors through four tranches of class A, B, C and D notes, all of which have a legal final maturity of Oct. 25, 2044. Credit is bolstered to the notes through an initial reserve representing 5.50% of the note balance.
Moody's assigns Aaa to the class A notes. The deal is slated to close on December 16, with Deutsche Bank as the initial note purchaser.
Overall, total initial hard credit enhancements equal 68.5%, 33.2%, 13.6% and 6.2% of the class A, B, C and D notes, respectively.
After the prefunding period, up to 7.50% of the total pool balance will consist of collateral from earlier transactions or newly acquired assets, timeshare loans, the rating agency said.
The deal comes to market with two strong sponsor and servicer entities. Grand Vacation Services is the deal's master servicer, while the sponsor, Hilton Resorts, will unconditionally and irrevocably guarantee that Grand Vacation Services will meet its obligations as master servicer of all its obligations.
Nevertheless, the current transaction exhibits some weaker characteristics compared with recent securitizations from HGVT platform, according to Moody's. For one, the weighted average (WA) FICO score, 727, is among the lowest scores that the shelf has seen. It also has the highest WA original loan term seen on the shelf, about 160 months.
These risks are mitigated somewhat by the larger proportion of upgrade loans with in the segment of longer-term loans, Moody's said.
