Two timeshares securitizations totaling $445 million priced Thursday, bringing the total for the month of October to $822 million - one of the busiest months ever.
Wyndham Worldwide’s Sierra Timeshare trust priced $325 million of bonds backed by a pool of fixed-rate timeshare loans. Sierra Timeshare Receivables 2014-3 sold $255.2 million in A’ rated, class A notes with a weighted average life of 3.3-years, at a spread of swaps plus 115 basis points, according to on Interactive Data report.
The BBB’ rated, 3.3-year, class B notes, sized at $69.7 million, priced at swaps plus 165 basis points.
Royal Bank of Scotland is the lead underwriter.
Wyndham Vacation Resorts, Wyndham Resort Development and Shell Vacations Club originated the loans included in the pool. All three entities are indirect, wholly owned operating subsidiaries of Wyndham Worldwide.
Wyndham's previous securitization, the Series 2014-2, was the first transaction to include receivables from the newly acquired (July 2013) Shell Vacations, which have been integrated within the WVRI platform.
Wyndham latest deal also had a higher volume of longer-term loans.: approximately 5% 2014-3 of the pool is comprised of 15-year loans compared with only 0.24% of the 2014-2 transactionl. Timeshare securitizations are typically backed by 10-year loans, and these that have historically performed better than the longer-term loans, according to Fitch.
But the issuer also increased credit enhancement on the A and B notes, to 33.00% and 14.00%, respectively, from 30.50% and 11.50% in the 2014-2 transaction.
Also pricing today are $120 million of securities issued by Hilton Grand Vacations under the Elara HGV Timeshare trust, according to a person familiar with the deal. The 2014-A deal issued $107 million of three-year, A’/’A’ rated class A notes at 150 basis points over swaps. The three-year, BBB’/ BBB’ rated class B notes priced at 200 basis points over swaps.
The owners of the timeshares underlying Elara HGV are members of one of two clubs: Hilton Grand Vacations Club or the Hilton Club, both of which operate under the umbrella of the high-profile resort company. The clubs jointly have 200,000 members.
There are 6,546 loans in the pool backing the deal, with an average balance of $17,393 and a weighted average coupon of 13.39%. The FICO scores of the underlying borrowers span a broad range, from 600 to 853, with a weighted average FICO score of 743.
So far this year, almost $2 billion of timeshare securitizations have been priced, in line with volumes seen in 2007 (a record issuance year for the asset class).