Wyndham Worldwide is prepping a $250 million securitization of timeshare loans, according to Fitch Ratings.
The notes to be issued by Sierra Timeshare 2015-1 are backed by a pool of fixed-rate timeshare loans originated by three of the company’s subsidiaries, Wyndham Vacation Resorts, (WVRI), Wyndham Resort Development Corp. (WRDC) and Shell Vacations Club.
This is Wyndham Worldwide’s 27th Sierra transaction, according to Fitch.
Credit Suisse is the lead underwriter.
The deal consists of two tranches of notes with a final maturity of March 2032: $197.22 million of notes with a preliminary A’ rating that benefit from credit enhancement of 31.5% and $52.78 million of notes with a preliminary BBB’ rating that benefit from enhancement of 12.5%.
In its presale report, Fitch noted that the initial, “hard” credit enhancement is lower than that of Wyndham’s previous deal, series 2014-3, but still more than sufficient to support the respective ratings.
The weighted average FICO score of obligors in the pool is the highest, at 721, going back to Wyndam’s 2011-1 transaction. The last 10 transactions had WA FICO scores ranging from 715-719. Transactions prior to 2009-1 had materially lower WA FICO scores, as they included borrowers with FICO scores of less than 600. This metric has been a strong indicator of future performance, according to Fitch.
However, the weighted average seasoning of loans in the pool has decreased to five months from 10 months in the previous transaction. Pools with lower seasoning may experience higher cumulative defaults.
The average principal balance for 2015-1 is the highest, going back to the 2011-1 transaction, at $21,676. Prior transactions had ranged between $16,203 and $21,329 since the 2011-1 securitization. This increase from the prior securitizations is largely attributed to less seasoning.
