Hilton Grand Vacations completes $300 million term note securitization
Hilton Grand Vacations Inc. successfully closed a $300 million securitization via Hilton Grand Vacations Trust 2026-2, issuing four classes of notes with coupons between 4.83% and 6.00%. The transaction saw significant oversubscription, resulting in a weighted average coupon of 5.16%. Net proceeds will support debt repayment and general corporate needs.
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Hilton Grand Vacations Inc. has completed a $300 million securitization of timeshare loans through Hilton Grand Vacations Trust 2026-2. The transaction achieved an overall weighted average coupon rate of 5.16% and an overall advance rate of 98%, reflecting strong investor demand with peak oversubscription reaching nearly 9x.
Note Issuance Details
The Trust issued four classes of Notes to qualified institutional buyers. The breakdown of the issuance is as follows:
| Class | Amount (Approx.) | Coupon Rate |
|---|---|---|
| Class A Notes | $118.8 million | 4.83% |
| Class B Notes | $98.6 million | 5.10% |
| Class C Notes | $51.1 million | 5.54% |
| Class D Notes | $31.5 million | 6.00% |
Dan Mathewes, president and chief financial officer of Hilton Grand Vacations, stated that the execution was exceptionally strong, allowing the company to achieve the tightest AAA spread in timeshare since January 2022. This outcome underscores the strength and reliability of the company's asset-backed securities platform.
Use of Proceeds and Participation
Proceeds from the issuance, net of fees, will be utilized to pay down debt and for other general corporate purposes. BofA Securities acted as the Structuring Lead Manager and Joint Bookrunner, joined by Barclays, Deutsche Bank Securities, Truist Securities, and Wells Fargo Securities. A syndicate of co-managers included Academy Securities, BMO Capital Markets, CIBC Capital Markets, Citizens Capital Markets, Goldman Sachs & Co. LLC, HSBC, MUFG, Regions Securities LLC, and Santander US Capital Markets.
Regulatory and Ratings Context
The Notes were offered in a private placement within the U.S. pursuant to Rule 144A under the Securities Act of 1933 and outside the U.S. in accordance with Regulation S. Certain classes of the transaction were rated by Fitch Ratings and Moody's Investors Service, Inc. Alston and Bird LLP represented Hilton Grand Vacations as issuer counsel.
How will the proceeds from this securitization impact Hilton Grand Vacations' overall leverage ratio and future borrowing costs?
Will the strong investor demand and tight spreads encourage Hilton Grand Vacations to pursue additional securitizations in the near term?
What are the potential risks to the performance of the timeshare loans backing these notes in the current economic environment?
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