Fitch Rates MVW Owner Trust 2015-1

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned the following ratings to MVW Owner Trust 2015-1:

--$233,200,000 class A asset-backed notes 'Asf'; Outlook Stable;

--$21,800,000 class B asset-backed notes 'BBBsf'; Outlook Stable.

KEY RATING DRIVERS

Improving Collateral Pool: The credit quality of the pool is slightly higher than that of MVWOT 2015-1 with a weighted average (WA) Fair Isaac Corp. (FICO) score of 727 up from 717. Additionally, seasoning has increased to 42 months from 24 months in MVWOT 2014-1.

Increase in Seasoning: The 2015-1 pool has seasoning of approximately 42 months, which is higher than any prior MVWOT transactions. Pools with higher seasoning may experience lower CGDs relative to unseasoned pools, as seasoned pools have incurred a significant portion of their defaults prior to their inclusion in a securitization.

Presence of Prefunding Account: As with the prior MVWOT transactions, Series 2015-1 features a prefunding account that will hold up to 20% (up from 18% in 2014-1) of the initial note balance after the closing date to purchase eligible timeshare loans. The transaction also allows for qualified substitutions of upgraded loans up to 15% of the pool balance.

Credit Enhancement Reduction: Initial hard credit enhancement (CE) for class A and B notes is 12.25% and 4.00%, respectively, lower than Series 2014-1. Despite the decline, available CE is sufficient to support Fitch's 'Asf' and 'BBBsf' stressed gross default assumption of 10.0%.

Stabilizing Performance: The 2010 to 2013 vintages are displaying improved performance relative to the weaker 2007-2009 periods.

Quality of Origination/Servicing: MVW/MORI has demonstrated sufficient abilities as an originator and servicer of timeshare loans, as evidenced by the historical delinquency and default performance of securitized trusts and of the managed portfolio.

Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of MVW would not impair the timeliness of payments on the securities.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults could produce cumulative gross default (CGD) levels higher than the base case and would likely result in declines of credit enhancement and remaining default coverage levels available to the notes. Additionally, unanticipated increases in prepayment activity could also result in a decline in coverage. Decreased default coverage may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.

Thus, Fitch conducts sensitivity analysis stressing both a transaction's initial base case CGD and prepayment assumptions by 1.5x and 2.0x and examining the rating implications on all classes of issued notes. The 1.5x and 2.0x increases of the base case CGD and prepayment assumptions represent moderate and severe stresses, respectively, and are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust's performance.

DUE DILIGENCE USAGE

Fitch was provided with due diligence information from Ernst & Young LLP. The due diligence information was provided on Form ABS Due Diligence-15E and focused on a comparison and re-computation of certain characteristics with respect to 250 Domestic sample loans and 10 Asian sample loans. Fitch considered this information in its analysis and the findings did not have an impact on our analysis.

Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in the report titled 'MVW Owner Trust 2015-1- Appendix'. These R&W are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated June 12, 2015.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Rating U.S. Timeshare Loan ABS (pub. 03 Jun 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866653

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

MVW Owner Trust 2015-1 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869108

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=989455

ABS Due Diligence Form 15E

https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=989455&flm_nm=15e_989455_1.pdf

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=989455

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150813006272/en/

Fitch Ratings
Primary Analyst
Margaret Rowe
Director
+1-312-368-3167
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Andrew Tinari
Analyst
+1-312-368-3127
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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