Orange Lake Country Club is marketing $176 million of notes backed by timeshare loans, according to Fitch Ratings.
The deal, Orange Lake Timeshare Trust 2016-A, will issue two tranches of notes: $138.16 million of senior notes with 30.75% credit enhancement are provisionally rated ‘A’ and $38.03 million of subordinate notes with 11% credit enhancement are rated ‘BBB’.
Bank of America Merrill Lynch is the lead underwriter.
The notes are backed by a pool of fixed-rate timeshare loans originated by Orange Lake and its subsidiary, Wilson Resort Finance with an average balance of $16,376, a weighted average term of 116 months and a weighted average remaining term of 107 months.
The nine months of seasoning for the collateral pool is down from 16 in the 2015 deal and 20 months in the 2014 deal, according to Fitch. “Pools with lower seasoning may experience higher cumulative gross defaults relative to seasoned pools, as seasoned pools have incurred a significant portion of their losses prior to their inclusion in a securitization,” the presale report states.
In other respects, the credit quality of the collateral is somewhat improved from the previous deal, but still worse than prior deals.
The weighted average FICO score of borrowers is 720, up slightly from 717 in Orange Lake’s previous deal, completed in 2015, but down notably from 733 in the sponsor’s 2014 deal. Similarly, the latest deal contains 50.7% upgraded loans, which is up slightly from 2015 deal (47.6%) but down from 2014 deal (53.0%).
Due to the shifting credit quality over the prior two transactions, Fitch’s cumulative gross default expectation of 18% is lower than 19% for the 2015 transaction but higher than 10.5% for the 2014 transaction.