| NEW YORK, Feb. 5, 1999 - In 1998, the timeshare term
securitization market experienced its most active year to date. Six term
securitizations (one right-to-use interest-backed and five fee-simple interest-backed)
totaling $530 million closed. This compares favorably with 1997's one securitization
totaling $28 million and 1996's two securitizations totaling $120 million.
DCR rated five of 1998's six securitizations (all fee- simple interest-backed),
which totaled $400 million. (This brought the total number of term timeshare
securitizations rated by DCR, since 1992, up to 20.) Of the five securitizations
rated by DCR, four carried DCR's ratings only. All six of 1998's securitizations
were privately placed. Four of the six securitizations were sponsored by
repeat issuers.
Below is a brief description of the five term securitizations rated
by DCR.
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Signature Resorts, now Sunterra Corporation,
sponsored its first term securitization in June. At that time, it was only
the second transaction to receive DCR's 'AAA' (Triple-A) rating. (The first
was Metropolitan Mortgage Timeshare Trust 1997-A.)
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Westgate Resorts, formerly Central Florida Investments,
Inc. (CFI), brought its seventh securitization to market in
August. At $165 million, it was (and still remains) the largest timeshare
issue rated by DCR.
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Fairfield Communities, Inc. sponsored
its second term securitization in August. The company's first securitization
closed in September 1993.
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Vistana, Inc. came to market with its
first term securitization in September. The senior tranche of this
$66 million transaction received DCR's 'AAA' (Triple-A).
-
Orange Lake Resort Country Club brought
is second securitization to market in December. The company's first
securitization closed in November 1992.
DCR expects that the issuance of timeshare mortgage- backed securities
will continue to  proliferate
over the next few years. Issuance in 1999 should exceed 1998's level .
As the spread differential between commercial paper and term securities
continues to contract, developers will 'take out' their commercial paper
warehouse lines with term securitizations. DCR expects that at least four
of the six issuers from 1998 will be in the market in 1999. DCR would not
be surprised if two of the sponsors, who have been absent from the term
market for more than three years, resurfaced or if the first securitization
sponsored by a timeshare specialty lender since Litchfield Financial's
1995 transaction closed.
DCR's rating methodology for timeshare mortgage-backed securities and
its New Financing Reports on 1998's Westgate, Fairfield, and Vistana securitizations
can be obtained by visiting the asset-backed securities page of DCR's web
site (www.dcrco.com), calling the contacts listed below, or contacting
DCR's Rating Hotline at 312-368-3198 or [email protected]. |
