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Thursday, January 7, 2010

Transfer Smart News: Issuance of Timeshare Asset-backed Securities in 2009 Shows a Recovering Sector

Since the economic meltdown broke out in the late of 2007, the timeshare industry had been undeniably hit just like almost all industries. On the consumers’ side, the skyrocketing fees had been hard for them and as a result, many owners try to get out from their timeshare contracts. But the issuance of timeshare asset-backed securities in 2009 shows a rebound implying that the sector may be on the road to a robust recovery as Standard & Poor's Ratings Services puts it.

Meanwhile, the issuance of such ABS passed the $1 billion mark in 2009, thus, easily topping the 2008 total, which plunged to just more than $600 million. On the other hand, volume in 2009 still lagged far behind the record of $1.77 billion last 2007.

According to S&P analyst Weili Chen, the comeback in volume is even more remarkable because it is happening amid declining sales, diminished property values, and higher consumer delinquencies for timeshares. The ratings service also added that timeshare securities are one of the few asset classes demonstrating strong investor demand and resilient credit performance without government support and despite recessionary conditions.

However, most U.S. consumers view timeshare as a discretionary purchase and timeshares have seen weakness amid the global economic crunch. Last year, sales fell some 30% which according to Chen, a record decline for the industry. The same year also has several owners try who to get rid of their timeshares. Some even hire a timeshare transfer industry such as the Transfer Smart just to get rid of such property. But the S&P stressed that the increase in delinquencies and defaults since September 2008 has been relatively modest and the preliminary signs indicate that the worst may be over.

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