Wyndham Consumer Finance is returning to the capital markets to sponsor a $325 million securitization of timeshare loans, coming to market with lower credit enhancement levels and a smaller collateral pool.
The deal, Sierra Timeshare 2024-3 Receivables Funding, will issue fixed-rate notes that have an Aug. 20, 2041 legal final maturity date, according to Fitch Ratings and S&P Global Markets, which are rating the notes.
The classes A, B, C and D notes benefit from hard credit enhancement totaling 57.9%, 36.6%, 13.9% and 4.5%, respectively, all of which are lower relative to the series 2024-2 notes. This primarily stems from lower overcollateralization in the capital structure. Initial excess spread is expected to increase from 9.07% per annum. On balance, Fitch says, the credit enhancement profile provides strong levels of loss coverage over its loss proxy.
Wyndham Vacation Resorts and Wyndham Resort Development originated the loans to the deal, which will issue notes through four tranches of notes, according to. The notes, all of which are fixed rate,
Barclays Capital is the lead underwriter on the deal, according to Fitch Ratings, and Wyndham Consumer Finance will service the notes, according to Fitch. The collateral pool is comprised of 13,297 loans, which have an average balance of $24,940. On a weighted average (WA) basis, the loans have a 112-month remaining term, a coupon of 15.2%, and an original FICO score of 738.
Fitch notes that while Wyndham Vacation Resorts account for 66.8% of the loans in the pool, Wyndham Resort Development loans perform better on a like-for-like FICO basis.
From S&P's perspective, the classes A, B, C and D notes can withstand breakeven default levels of 73.38%, 57.8%, 40.71% and 34.17%, respectively. Those levels surpass the loss multiples of its expected 20.7% in cumulative gross defaults, it said. This loss rate is within the same range as the 20.8% that it expected from the 2024-2 series, it said.
S&P assigns ratings of AAA, A, BBB and BB to the classes A, B, C and D notes, respectively. Fitch, meanwhile, assigns ratings of AAA, A, BBB and BB- to the A, B, C and D notes, respectively.
