Fitch: Delinquencies Rise Again for U.S. Timeshare ABS

NEW YORK--()--U.S. timeshare ABS delinquencies increased for the third straight quarter and more increases may be coming, according to the latest index results from Fitch Ratings.

Total delinquencies for first quarter-2016 (1Q'16) were 3.58%, up from 3.41% in 4Q'15 and the 2.79% observed in 1Q'15. This is the third quarter of consecutive increases as well as the highest level observed since the 3.58% at 1Q'12 but well below the high of 5.26% in 1Q'09. The increase was evident across all issuers in the index and driven by overall market normalization as well as the seasonal trend to increase in the winter months.

Defaults also increased in 1Q'16 to the highest level since 2Q'12. Defaults for 1Q'16 were 0.79%, up from 4Q'15 at 0.61% and 0.67% observed a year ago in 1Q'15. In fact, timeshare defaults have increased each of the last four quarters and remain elevated compared to pre-recessionary levels. On an annualized basis (rolling 12 months), defaults were 7.29% for 1Q'16, up from 6.77% for 4Q'15. This is the third quarterly increase after three years of consecutive quarterly declines.

Fitch expects some additional nominal increases in delinquencies and defaults in the near term as performance normalizes after recent year-over-year improvement. Fitch's 2016 Rating Outlook for timeshare ABS remains Stable due in part to the delevering structures found in timeshare transactions, resulting in 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 9% 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 then Structured Finance then ABS then ABS Indices then 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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Margaret Rowe
Director
+1-312-368-3167
Fitch Ratings Inc., 70 W. Madison Street, Chicago, IL 60602
or
John Bella
Managing Director
+1-212-908-0243
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Margaret Rowe
Director
+1-312-368-3167
Fitch Ratings Inc., 70 W. Madison Street, Chicago, IL 60602
or
John Bella
Managing Director
+1-212-908-0243
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com