Wyndam Consumer Finance is sponsoring a securitization of revenue from a pool of fixed-rate timeshare loans and will raise $375 million through the Sierra Timeshare 2024-2 Receivables Funding.
Wyndham Vacation Resorts Inc., and Wyndham Resorts Development Corp. account for 67.6% and 32.4% of the pool, respectively, making those entities the two main loan originators and contributors, according to a pre-sale report from Fitch Ratings.
The transaction will issue notes and repay investors through four tranches of A, B, C and D notes, said analysts from S&P Global Markets, which also rated the notes. The pool is secured by 15,706 loans, which have an average balance of $24,871, say the rating agencies. Also, all the loans have a June 2041 legal final maturity date. The class A, B, C and D notes have credit enhancement levels of 59.2%, 38.2%, 15.8% and 6.5%, respectively.
Compared with the 2024-1 transaction, credit enhancement levels on 2024-2 are lower, Fitch said, mainly because of lower overcollateralization levels on the latter. Aside from overcollateralization, a reserve account representing 2.50% of the pool balance and subordination provide credit enhancement to the deal, Fitch said.
Should the reserve account require more funding, the transaction can draw on a letter of credit from Bank of Nova Scotia, Fitch said. The trust will draw on the LOC under several circumstances outlined in the deal covenants, including in the case of any monthly liabilities shortfalls, the LOC has not been extended or replaced 10 days and a sequential order event or rapid amortization event has occurred.
S&P notes that overall the 2024-2 collateral pool is slightly stronger than that of Sierra 2024-1. The concentration of very seasoned called collateral increased to 5.27%, up from 0.6%.
Called collateral amounts to 5.3% of the pool. That's higher than the 0.6% in the 2024-1 deal, but much lower than the 12.7%, 10.7% and 6.9% seen on the 2022-3, 2022-2 and 2022-1 series, respectively, S&P said.
On a weighted average (WA) basis, the underlying loans had a current FICO score of 734.
S&P assigns AAA to the class A notes; A to the class B notes; BBB to the class C notes; and BB to the class D notes. Fitch assigns AAA to the A notes; A to the class B notes; BBB to the class C notes and BB- to the class D notes.
