Hilton Resorts, a unit of Hilton Worldwide, is preparing $200 million securitization of timeshare loans, according to a presale report published by Fitch Ratings.
The deal, Hilton Grand Vacations Trust 2014-A, will issue two tranches of notes: the $173.47 million class A notes have a preliminary AA’ rating and $26.53 million of class B notes have a preliminary A’ rating.
Deutsche Bank Securities is the underwriter.
This is Hilton’s second timeshare securitization; the first was completed in August 2013, and was not rated by Fitch.
The 2014-A pool has a weighted average FICO score of 742 and a weighted average seasoning of 31 months. A highly seasoned pool typically experiences lower defaults than an unseasoned pool.
Approximately 15% of loans are made to foreign obligors, the majority of which are from Japan. Fitch noted in its presale report that the Japan portfolio has historically performed consistent with the domestic portfolio. “However, the trust could be exposed to weakness in foreign economies, which could result in increased defaults,” the report states.
Initial hard credit enhancement for the class A and B notes is 16.0% and 3.0%, respectively, compared with 3.0% for class A notes in the 2013-A transaction.