Fitch Expects to Rate MVW Owner Trust 2014-1

NEW YORK--(BUSINESS WIRE)--Fitch Ratings expects to assign the following ratings to the notes issued by MVW Owner Trust 2014-1:

--$216,250,000, class A asset-backed notes 'Asf'; Outlook Stable;

--$23,750,000, class B asset-backed notes 'BBBsf'; Outlook Stable.

KEY RATING DRIVERS:

Stable Collateral Quality: Series 2014-1 is largely composed of Marriott Vacation Club (MVC) loans (95.3%), displays a weighted average (WA) Fair Isaac Corp. (FICO) score of 717 and features approximately 18.6% of loans to foreign obligors. Additionally, the pool has a weighted-average seasoning (WAS) of 24 months; a highly seasoned pool typically experiences lower defaults than an unseasoned pool.

Presence of Prefunding Account: As with the prior MVWOT transactions, series 2014-1 features a prefunding account that will hold up to 18% (versus 10% in 2013-1) of the initial note balance after the closing date to purchase eligible timeshare loans. The transaction also allows for qualified substitutions of upgraded loans up to 15% of the pool balance.

Available Credit Enhancement Structure: Initial hard credit enhancement (CE) for class A and B notes is 14.0% and 4.5%, respectively, compared with 15.5% and 5.5% in series 2013-1. The decline in enhancement is due to lower overcollateralization (OC) and subordination. Soft CE is also provided by expected excess spread of 9.3% per annum.

Improving Performance: Similar to other timeshare originators and other consumer asset types, MVW/MORI's delinquency and default performance exhibited notable improvements beginning in 2010, relative to the weak 2007-2009 vintages. Fitch's seasoned-adjusted base case cumulative gross default (CGD) proxy for the 2014-1 pool is 12.00%.

Quality of Origination/Servicing: MVW/MORI has demonstrated sufficient abilities as an originator and servicer of timeshare loans, as evidenced by the historical delinquency and default performance of securitized trusts and of the managed portfolio.

Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of MVW would not impair the timeliness of payments on the securities.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults could produce CGD levels higher than the base case and would likely result in declines of CE and remaining default coverage levels available to the notes. Additionally, unanticipated increases in prepayment activity could also result in a decline in coverage. Decreased default coverage may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.

Thus, Fitch conducts sensitivity analysis by stressing both a transaction's initial base case CGD and prepayment assumptions by 1.5x and 2.0x and examining the rating implications on all classes of issued notes. The 1.5x and 2.0x increases of the base case CGD and prepayment assumptions represent moderate and severe stresses, respectively, and are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust's performance.

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated September 22, 2014. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in MVW Owner Trust 2014-1 - Appendix'. These R&Ws are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated April 17, 2012.

The presale report is available to all investors on Fitch's website at 'www.fitchratings.com'. For more information about Fitch's comprehensive subscription service FitchResearch, which includes all presale reports, surveillance, and credit reports on more than 20 asset classes, contact product sales at [phone] or at '[e-mail]'.

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

Applicable Criteria and Related Research:

--'Criteria for Rating U.S. Timeshare Loan ABS' (June 9, 2014);

--'Global Structured Finance Rating Criteria' (August 4, 2014);

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (April 17, 2012).

Applicable Criteria and Related Research: MVW Owner Trust 2014-1 (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=778388

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=878534

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