RPT-Fitch: U.S. Timeshare ABS Delinquencies Drop Again

Fri May 30, 2014 9:06am EDT

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May 30 (Reuters) - (The following statement was released by the rating agency)

U.S. timeshare ABS delinquencies fell this past quarter and are lower year over year, according to the latest index results from Fitch Ratings.

Total delinquencies for first quarter-2014 (1Q'14) were 3.19%, down from 3.27% in 1Q'13 and 3.38% in 4Q'13. This marks seven straight quarters of year-over-year improvement. Despite these modest improvements, delinquencies have largely normalized at their historical levels following the dramatic increases of 2008 and 2009.

The quarterly and year-over-year improvement is also evident in default performance. Defaults for 1Q'14 at 0.65% decreased slightly from 4Q'13 at 0.66%, and are down from the 0.72% observed a year ago for 1Q'13. While quarterly and year-over-year improvement is evident, default levels remain somewhat elevated compared to pre-recessionary levels.

On an annualized basis (rolling 12 months), defaults were 7.73% for 1Q'14, down from 7.93% for 4Q'13. This represents the eighth consecutive quarter of improvement as well as the lowest level of defaults for timeshare ABS in over four years.

Fitch's Rating Outlook for timeshare ABS remains Stable due in part to the delevering structures found in timeshare transactions and ample credit enhancement levels.

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

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