Marriott Ownership Resorts offers $445 million timeshare loan ABS

The pool of timeshare loans associated with the Marriott, Sheraton, Westin, Hyatt vacation club brands and the Hyatt Vacation Club Heritage series will provide $445 million in asset-backed securities (ABS) from the MVW 2024-2 trust.

Marriott Ownership Resorts Inc. is sponsoring the deal, which will sell bonds to investors through three tranches of classes A, B and C, all with a statutory maturity date of March 2042, according to ratings analysts at Fitch Ratings. The Asset Securitization Report’s deal database states that MVW 2024-2 is scheduled to close on September 30. Wells Fargo Securities in the manager role.

S&P Global Ratings said Class A, B and C bonds will issue fixed-rate bonds to investors. Meanwhile, Fitch says that the total credit enhancement levels of classes A, B and C are 37.5%, 18.4% and 7.0%, respectively. This compares unfavorably with higher CE levels seen in notes in the 2024-1 transaction and is due to lower subordination, the rating agency said.

However, Fitch said the deal had several positive aspects. First, the deal is expected to cover only Japanese foreign borrowers out of a pool of 9,333 loans. Fitch analysts said even this risk was small, with Japanese borrowers representing only 2.8% of called pools and 0.6% of non-called pools.

“These loans are historically strong relative to the rest of the foreign borrower portfolio and perform comparable to U.S. borrowers with FICOs around 700,” according to Fitch’s pre-sale report.

On average, borrowers have a balance of $31,181 and an original FICO score of 739. California represents the largest share of underlying loans and borrowers at 23.8%; Florida, Texas, Pennsylvania and New York represent 8.2%, 6.1%. 3.9% and 3.8% respectively.

There’s another reason why analysts say the pool is stronger overall than the MVW 2024-1 transaction from a credit perspective. This also includes $59 million of collateral from the MVW Owner Trust 2018-1 and VSE 2018-A VOI Mortgage transaction, Fitch said. With a significant 79-month season, it will represent 13.0% of the final total pool; this is an increase from 6.2% in 2024-1.

Wells Fargo Securities is the lead underwriter on the deal. Research firm Finsight lists ATLAS SP Partners and Bank of America Securities as joint leaders.

S&P assigns ratings AAA, A, and BBB to classes A, B, and C, respectively. Similarly, Fitch assigns AAA, A and BBB to classes A, B and C, respectively.