Marriott Vacations Worldwide Corp. has completed a securitization of a pool of approximately $264 million of vacation ownership loans.
MVW Owner Trust 2015-1 issued $255 million of notes via a private placement with an overall weighted average interest rate of 2.56%, according to a press release published Friday. There are two tranches: approximately $233 million of class A notes, rated A’ by Fitch Ratings, that pay 2.52%; and approximately $22 million of class B notes, rated BBB’ by Fitch, that pay 2.96%.
The loans backing this deal are of a higher credit quality than those backing Marriot’s previous timeshare securitization, completed in September 2014, and that allowed the sponsor to achieve the same credit ratings, despite having lower credit enhancement that comparable tranches of the previous deal.
The weighted average FICO of the loans in the pool is 726, up from 717 for MVWOT 2014-1. The loans in the 2015-1 pool are also more seasoned; borrowers have made, on average, 43 monthly payments which is higher than any prior MVWOT transaction, according to Fitch. Marriott’s previous securitization, MVWOT 204-1, for example, pools loans with 24 months' seasoning.
Pools with higher seasoning may experience lower cumulative gross defaults relative to unseasoned pools, as seasoned pools have incurred a significant portion of their defaults prior to their inclusion in a securitization.
The class A notes of the 2015 deal are structured with credit enhancement of 12.25%, down from 14% for the 2014 deal. Likewise, the class B notes of the 2015 deal have just 4% credit support, vs 4.5% for the 2014 deal.
As with the prior transactions, the series 2015-1 features a prefunding account that will hold up to 20% (up from 18% in 2014-1) of the initial note balance after the closing date to purchase eligible timeshare loans. The transaction also allows for qualified substitutions of upgraded loans of up to 15% of the pool balance.
