Last week, timeshare developer Bluegreen Corp. completed pricing its first-ever term ABS in the Rule 144A market, clearing the scandal-laden for infrequent issuers in off-the-run asset classes. ING Financial Markets LLC led the offering, its own first term ABS in the sector since hiring timeshare guru Andrew Yuder last year.
"Distribution was a challenge," said Yuder, a managing director at ING, "Normally deals like this sell from the bottom up, but typical timeshare buyers pulled back a bit," he added. Bluegreen CFO John Chiste concurred, citing "problems in the healthcare sector" negatively impacting new issues in off-the-run assets.
After a slight tweaking of its structure, BXG Receivables Note Trust 2002-A priced a four-tranche fixed-rate senior/sub transaction at levels slightly wider than indicative levels, particularly down in credit. Some classes, however, were oversubscribed, according to ING.
Sources at both the issuer and the underwriter cited the current environment, as issuers feel the ripples of the National Century Financial scandal.
The structure went from triple-A rated A class paper down to the triple-B level. Backed by loans with 12-year legal final maturity, BXG RNT 02-A has a 3.65-year average life throughout the capital structure.
Proceeds for this transaction will go to pay down a $125 million conduit facility Bluegreen has with ING, which was set up in April. In the past, BXG has privately placed securitizations totaling $190 million into the conduit facilities of Barclays Capital, First Union Securities (now Wachovia Securities) and Heller Financial (now G.E. Commercial Finance). Also, Bluegreen has sold Remic securities through its land development unit in the early-to-mid 1990's.
Timeshare-loan origination for Bluegreen is estimated at $200 million in the coming year, and Chiste said ABS remains in Bluegreen's future, with plans for a new issue offering with ING in 2003.
Bluegreen is a Boca Raton, Fla.-based resort owner/operator, focused mainly in the Southeast U.S. Also, Bluegreen builds residential developments in the South and Southwest U.S., providing financing for both aspects of its business.