Marriott Ownership Resorts offers $445 million in timeshare loan ABS

A pool of timeshare loans associated with the Marriott, Sheraton, Westin, Hyatt vacation club brands and the Hyatt Vacation Club Heritage line will secure $445 million in asset-backed securities (ABS) from the MVW 2024-2 trust.

Marriott Ownership Resorts Inc. is sponsoring the deal, which will sell notes to investors through three tranches of classes A, B and C, all of which have March 2042 as their legal final maturity date, according to ratings analysts at Fitch Ratings. Asset Securitization Report's deal database notes that MVW 2024-2 is slated to close on September 30, with Wells Fargo Securities in the role of managers.

S&P Global Ratings says the classes A, B and C notes will issue fixed-rate notes to investors. Fitch, meanwhile, says the A, B and C classes have total credit enhancement levels of 37.5%, 18.4% and 7.0%, respectively. This compares unfavorably to higher CE levels seen on the notes from the 2024-1 transaction, and stems from lower subordination, the rating agency said.

There are a couple of positive aspects of the deal, however, Fitch said. For one, the deal is expected to include only Japanese foreign obligors from the pool of 9,333 loans. Even that exposure is small, with Japanese obligors representing only 2.8% of called and 0.6% of the non-called pools, Fitch analysts said.

"These loans are historically strong versus the remainder of the foreign obligor portfolio, performing comparable with U.S. borrowers with FICOs around 700," according to Fitch's pre-sale report.

On average, borrowers have a balance of $31,181, with an original FICO score of 739. California the represents the largest portion of underlying loans and borrowers, with 23.8%, with Florida, Texas, Pennsylvania and New York representing 8.2%, 6.1%, 3.9% and 3.8%, respectively.

There is another reason analysts say the pool is generally stronger than the MVW 2024-1 transaction, from a credit perspective. It also includes $59 million of called collateral, pulled from the MVW Owner Trust 2018-1 and VSE 2018-A VOI Mortgage transaction, Fitch said. With substantial seasoning, 79 months, it will represent 13.0% of the final aggregate pool, an increase from 6.2% in 2024-1.

Wells Fargo Securities is lead underwriter on the deal. Research firm Finsight names ATLAS SP Partners and Bank of America Securities as joint leads.

S&P assigns ratings of AAA, A and BBB to classes A, B and C, respectively. Similarly, Fitch assigns AAA, A and BBB to classes A, B and C, respectively.