CHICAGO, IL (Sep 08, 2011) — U.S. timeshare delinquencies fell again this past quarter, according to the latest index results from Fitch Ratings.
The decline in delinquencies reflects not only the seasonal improvement that timeshare loans typically see in the spring and summer, but also year-over-year improvement. Now within range of historical averages, Fitch expects that delinquencies will continue to follow seasonal patterns, but that year over year improvements will subside.
‘With timeshare ABS delinquency performance returning to pre-recessionary levels, improvements figure to level off,’ said Senior Director Brad Sohl, adding ‘Therefore, barring meaningful economic deterioration, timeshare performance is likely to remain stable.’
Total delinquencies for second-quarter 2011 (2Q’11) were 3.21%; down from 3.38% in 1Q’11 and 3.42% at the same time last year. However, that trend may be coming to an end. Monthly defaults for June remained unchanged from March data at 0.79%. Improved default trends typically lag those of improved delinquencies in the spring.
The delevering of timeshare ABS structures and ample credit enhancement levels combined with improved performance should continue to support rating stability. As such, Fitch’s Rating Outlook for Timeshare ABS remains stable.
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
Additional information is available at www.fitchratings.com .
SOURCE: Fitch Ratings