CHICAGO, IL (Nov 19, 2014) — U.S. timeshare ABS delinquencies stabilized in the third quarter following the return to historically normal levels, according to the latest index results from Fitch Ratings. Delinquencies remain lower compared to third quarter-2013 (3Q’13).
Total delinquencies for 3Q’14 were 2.89%, down slightly from 2.92% in 2Q’14 and down further from 3.14% in 3Q’13. Consistent year-over-year improvement has been observed for two years. Furthermore, this is the lowest level of delinquencies reported by the Fitch index since 2007.
Defaults are down compared to last quarter, and are also showing year-over-year improvement. Defaults for 3Q’14 were 0.55%, down from 2Q’14 at 0.66%, and from the 0.64% observed a year ago for 3Q’13. The decrease this quarter is attributed to both seasonality and the inclusion of a new issuer with limited defaults to date. Though this is the lowest quarterly reported number since June 2008, the rate is still somewhat elevated compared to pre-recessionary levels.
On an annualized basis (rolling 12 months), defaults were 7.10% for 3Q’14, down from 7.45% for 2Q’14. This represents over two years of consecutive quarterly improvement as well as the lowest level of defaults for timeshare ABS in over four years.
Fitch’s 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’.
SOURCE: Fitch Ratings
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