Marriott is venturing out with $240 million of bonds backed by timeshare loans, in what is likely one of the few offerings to launch while much of the industry gathers for a conference in Miami.
MVW Owner Trust 2014-1 will issue two tranches of notes, according to a presale report published by Fitch Ratings: a $216.5 million tranche with credit enhancement of 14% and a preliminary A’ rating and $23.75 million tranche with credit enhancement of 4.5% and a preliminary BBB’ rating. Both have a final maturity of September 2031.
Credit Suisse is the structuring lead manager.
The notes are backed by a pool of fixed-rate timeshare loans originated by Marriott Ownership Resorts, a subsidiary of Marriott Vacations Worldwide Corp.
This is MVW’s 16th term securitization.
The pool has a weighted average FICO score of 717, up slightly from 713 in Marriott’s previous timeshare deal in 2013; it also features approximately 18.6% of loans to foreign obligors, up from 17.94% in the 2013 transaction. Among other rating considerations highlighted in Fitch’s presale report, the pool has a weighted-average seasoning of 24 months; a highly seasoned pool typically experiences lower defaults than an unseasoned pool.
As with the prior transactions, the series 2014-1 features a prefunding account that will hold up to 18% (versus 10% in 2013-1) of the initial note balance after the closing date to purchase eligible timeshare loans. The transaction also allows for qualified substitutions of upgraded loans up to 15% of the pool balance.
