Despite the recession, timeshare asset-backed securities (ABS) is one of the few asset classes demonstrating a renewed level of investor demand and resilient credit performance according to a recent Standard & Poor’s analysis. In addition, Fitch Ratings found that total ABS delinquencies fell compared to the same period last year for the first year-over-year improvement since August, 2007.
Issuance of ABS based on timeshares passed the one billion dollar mark in 2009 with more than two-thirds being in the fourth quarter. Ratings performance was solid, in part because timeshare note structuring offers sufficient credit enhancement to absorb multiples of the historical default levels. As a result, developers such as Marriott, Wyndham, Diamond Resorts, Bluegreen and Starwood have issued new term securitization and sold them to the capital markets in 2009.
“This is another indicator that our market is resilient and that recovery has begun,” said Howard Nusbaum, president and CEO of the American Resort Developments Association (ARDA). “The increase in delinquencies and defaults in the sector since September 2008 has been relatively modest especially when compared to other ABS classes, and we believe preliminary signs indicate that the worst is over.”
News from the world of AIRDA 