Holiday Inn Club Vacations is sponsoring a $229.4 million securities sale in the capital markets backed by a pool of vacation ownership loans originated by two other related brands, Myrtle Holiday 1 and Wilson Resort Finance.
Vacation ownership loans backing the deal are fixed rate and will finance the purchase of timeshare interests at resorts around the country with Florida, Texas and North Carolina accounting for the top three percentages of the pool, by principal balance, according to Moody's Ratings.
All four tranches of the transaction, HINNT Timeshare 2025-A, are set to mature on March 15, 2044. Total initial hard credit enhancements represents 59.1%, 27.7%, 12.7% and 4.4% on classes A, B, C and D, respectively, according to Moody's.
Moody's also said HINNT 2025-A benefits from initial reserve of 5.00%, and initial overcollateralization of 1.95%.
Wells Fargo Securities is the initial note purchaser, according to Moody's.
Borrowers are considered prime in this pool, but Fitch Ratings notes that delinquency rates have been increasing since 2022. At yearend 2024, 4.57% of the portion of HICV's managed portfolio that is being securitized was delinquent by 30 days or more. That compares with 4.35% at the end of 2023 and 3.67% at the end of 2022, Fitch said.
Among other credit challenges, the sponsor can voluntarily repurchase or substitute defaulted timeshare loans up to 35% of the initial pool balance, Moody's said. That is a high threshold compared with other consumer ABS deals, Moody' said, because a court is more likely to recharacterize HICV's sale of loans to the depositor as a financing.
Yet if the transaction does repurchase defaulted timeshare loans, that will increase recovery rates and reduces losses to the securitization, which is a credit plus, Moody's said.
HICV is an experienced sponsor and servicer, and Computershare is on the deal as backup servicer and indenture trustee, which also help the timely repayment of notes, Moody's said.
Moody's assigns Aaa, A3, Baa3 and Ba2 to classes A, B, C and D, respectively. Fitch assigns AAA, A-, BBB and BB- to the class A, B, C and D tranches, respectively.
