Fitch: U.S. Timeshare ABS 4Q Delinquencies Reach Three-Year High

U.S. timeshare ABS delinquencies increased to the highest level in three years this past quarter, according to the latest index results from Fitch Ratings.

Total delinquencies for fourth quarter-2015 (4Q'15) were 3.41%, up from 2.96% in 3Q'15 and the 2.89% observed in 4Q'14. This is the highest level observed since the 3.55% at 4Q'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 4Q'15, and compared to a year ago. Defaults for 4Q'15 were 0.61%, up slightly from 3Q'15 at 0.59% and 0.55% observed a year ago in 4Q'14. Although they remain slightly elevated compared to pre-recessionary levels, defaults have displayed overall improvement over the last three years.

On an annualized basis (rolling 12 months), defaults were 6.77% for 4Q'15, up from 6.64% for 3Q'15. This is the second quarterly increase after three years of consecutive quarterly improvement.

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

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

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Contacts:

Fitch Ratings Inc.
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

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