Hilton Grand Vacations plans a debut $145 million timeshare loan securitization of loans targeting primarily Japanese tourists for a newly opened resort in Honolulu.

BRE Grand Islander Timeshare Issuer 2017-A is collateralized by timeshare loans and has an extraordinarily large concentration of Japanese borrowers, according to presale reports published Wednesday.

Two classes of notes will be issued in the transaction: $133.1 million oif Class A notes with preliminary ‘A+’ ratings from S&P Global and ‘A’ by Fitch Ratings and $11.9 million of Class B note size is rated ‘A-’ by S&P and ‘BBB’ by Fitch.

Credit support for the Class A notes includes 10.5% subordination and overcollateralization (with a 6% target overcollateralization), a 1% reserve account and 7.15% of initial excess spread.

Bank of America Merrill Lynch was the structuring agent.

The loans were issued to prime borrowers in HGV's new Hawaiian resort, The Grand Islander, which opened this month.

The pool of borrowers has an average weighted FICO of 745, which is in line with other HGV deals; but S&P notes the deal has one of the “largest foreign buckets we have seen in the timeshare space,” with 77% of the loans that are or will be originated with overseas borrowers, primarily Japanese tourists. (The resort specifically caters to Japanese with in-room rice cookers and infinity resort pools exclusively for guests, according to S&P.)

At least 65% of the loans will be to Japanese nationals, S&P notes.

The aggregate loan balance of the pool is $127.2 million among 3,501 loans, which range in original balances of $36,000 to $416,572 – which is far higher than other recent HGV timeshare securitizations.

Although concentrated with borrowers from Japan, S&P notes that historical default data is low for Japanese borrowers, who also traditionally make higher down payments: the loans in the BRE Grand Islander pool of an average original equity of 29.96%, compared to the range of 13.38%-21.52% for other HGV timeshare loan pools.

Hilton Grand Vacations was spun off this year by Hilton Worldwide, but entered a 100-year licensing agreement with Hilton. HGVC is affiliated with 47 different resorts.

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