Fitch: U.S. Timeshare ABS Delinquencies & Defaults Retreat, But Not For Long

CHICAGO--(Business Wire)--
Total delinquencies and monthly defaults on U.S. timeshare ABS declined in the
third quarter of 2009 (3Q'09), according to the latest timeshare ABS index from
Fitch Ratings. However, due to seasonal patterns, Fitch expects that performance
will worsen in the coming months.

"Timeshare performance will continue to follow traditional seasonal delinquency
patterns, resulting in increasing delinquencies and defaults through the winter
months," said Director Brad Sohl. "However, ample credit enhancement within
these transactions should continue to ensure limited negative rating actions."

Most timeshare ABS are structured with significant levels of credit enhancement
to senior classes, shielding those classes from some potential downgrades. While
a few transactions include less enhanced subordinate classes, these classes have
so far been able to support multiples of expected defaults commensurate with
current ratings. As such, Fitch's outlook for asset performance remains
declining, while the Rating Outlook remains Stable for the U.S. timeshare ABS
sector.

Total delinquencies decreased to a 2009 low of 4.36% in July, down nearly 22%
from the all time high of 5.58% realized in February. This reduction is
consistent with the seasonal performance improvement that is typically seen in
timeshare ABS. However, total delinquency levels have since increased, reaching
4.64% at the end of 3Q'09, 13% higher than the same period in 2008.

Default experience has followed a similar pattern, as expected. Monthly defaults
receded to .71% in August 2009, the lowest level since October of the prior
year. However, September default activity increased to .76%, lagging the
delinquency performance deterioration by one month. On an annualized basis
(rolling 12 months), default experience continues to breach historical peaks,
reaching 9.21% for the index in September, as US timeshare borrowers continue to
struggle in the current economic environment.

Fitch's timeshare ABS index is an aggregation of performance statistics on pools
of securitized timeshare loans originated by various developers. Expected
cumulative gross defaults on underlying transactions can range from 10% to above
20%. While delinquencies and defaults may vary on an absolute basis, most
transactions supporting the index exhibit similar overall trends.

The Fitch timeshare performance index summarizes average monthly delinquency
(over 30 days) and gross default trends tracked in Fitch's database of timeshare
asset backed securities (ABS) dating back to January 1997 and is available on a
quarterly basis.

Fitch's quarterly index can be found at 'www.fitchratings.com' under the
following headers:

Sectors >> Structured Finance >> ABS >> ABS Indices >> Timeshare

Additional information is available at 'www.fitchratings.com'

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE.

Fitch Ratings
Contact: Brad Sohl, +1-312-368-3127 (Chicago)
Du Trieu, +1-312-368-2091 (Chicago)
John Bella, +1-212-908-0243 (New York)
Media Relations
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

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