NEW YORK (February 27, 2014) — U.S. timeshare ABS delinquencies increased moderately this past quarter due to seasonal trends, though year-over-year declines continue, according to the latest index results from Fitch Ratings.
Total delinquencies for fourth quarter 2013 (4Q’13) were 3.38%, up slightly from 3.14% in 3Q’13. The increase reflects the seasonal trend that takes hold in the fall and winter. However, 4Q’13 marks the sixth consecutive quarter of year-over-year improvement. Delinquencies for 4Q’12 were 3.55% and have largely normalized at their historical levels following the dramatic increases of 2008 and 2009.
The year-over-year improvement is also evident in default performance. While monthly defaults for 4Q’13 at 0.66% increased slightly from 3Q’13 at 0.64%, they are down from the 0.75% observed in 4Q’12. Despite the improvement over 2013, timeshare ABS defaults are still elevated compared to pre-recessionary levels.
On an annualized basis (rolling 12 months), defaults were 7.93% for 4Q’13. This is lower than the 8.17% observed last quarter and 8.54% a year ago. This is also 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 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‘.