Vacation ownership loans that Wilson Resort Finance and Holiday Inn Club Vacations (HICV) originated will provide the underlying revenue for $400 million in asset-backed securities (ABS), that will be issued through the HINNT Timeshare 2024-A trust.
Holiday Inn Club Vacations is sponsoring the securitization, and its track record as an experienced sponsor and servicer of timeshare loans counts as a credit strength, according to Moody's Investors Service. Another element to the deal that bolsters the securitization is that HICV has the option to repurchase defaulted timeshare loans, a move that boosts recovery rates, and reduces losses in the securitization deals, the rating agency said.
Fitch Ratings takes a more neutral view of that element of the deal, its analysts said. The option to repurchase or substitute defaults has a limit of 35%. The rating agency said it gave no credit for substitutions and repurchases for the current deal, which is consistent with its analysis for the prior transactions, the company said.
The notes have total initial hard credit enhancement composed of an initial reserve account representing 2.50% of the pool balance in all notes, initial overcollateralization of 1.50% and subordination. Total hard credit enhancement on the deal amounts to 64.00%, 41.00%, 18.00%, 10.50% and 4.00% on the class A, B, C, D and E notes, according to Moody's.
The underlying timeshare loans have an increasing weighted average (WA) FICO score, which was 734 across the statistical pool on the current deal, after coming in at 729 score seen on the previous deal, the HINNT 2022-A, Fitch said. The underlying pool contains 18,949 loans that have an average balance of $15,834. On a WA basis, the loans have an original term of 118 months, and a remaining term of 96 months, and a WA coupon of 14.78%, Fitch said.
Moody's assigns ratings of Aaa, A2, Baa3, Ba2 and B3 to the A, B, C, D and E tranches, respectively, while Fitch AAA, A, BBB, CC- and B.
