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Rating Action:

MOODY'S RATES MARRIOTT 2005-1 TIMESHARE RECEIVABLES DEAL Aaa

14 Jun 2005
MOODY'S RATES MARRIOTT 2005-1 TIMESHARE RECEIVABLES DEAL Aaa

$196 Million of Asset-Backed Securities Rated

New York, June 14, 2005 -- Moody's Investors Service assigned a Aaa rating to the Class A notes issued by Marriott Vacation Club Owner Trust 2005-1 in Marriott Ownership Resorts, Inc.'s. (MORI) securitization of timeshare receivables. Moody's also rated the class B, C, and D notes Aa2, A2, and Baa2, respectively.

The ratings are based on the amount of credit enhancement provided to each of the classes, the credit quality of the timeshare receivable obligors, the quality of the resorts built by MORI which is a wholly-owned subsidiary of Marriott International, Inc. (Marriott) rated Baa2, the services and amenities provided to the resorts, the financial ability and incentive of Marriott to properly manage the resorts, the flexibility of vacation options, and the structure of the transaction. The complete ratings action is as follows:

Issuer: Marriott Vacation Club Owner Trust 2005-1

$162,680,000 4.506% Class A Notes, rated Aaa

$8,820,000 4.625% Class B Notes, rated Aa2

$12,740,000 5.025% Class C Notes, rated A2

$11,760,000 5.622% Class D Notes, rated Baa2

CONSISTENT TIMESHARE RECEIVABLE POOL CHARACTERISTICS

A timeshare receivable arises under a loan to purchase vacation time. The credit risk for this asset class must be analyzed in light of the borrower's ability and willingness to pay the loan. The lack of significant underwriting standards (which is typical for the industry), and the high loan-to-sale price ratios are additional risk factors. However, MORI does have underwriting standards that are better than average that involve FICO score and downpayment ratios. Moreover, the demographics of the borrowers, the quality of the Marriott resorts, and the array of vacation choices combine to be mitigating factors.

Similar to previous pools, the credit quality of the 2005-1 pool is better than the industry average. The weighted average FICO score in the pool is 719, similar to 715 of the last transaction and higher than the other previous deals (707 in 2004-1, 703 in 2002-1, and 705 in 2000-1). The percentage of scores below 600 is low at 2.58%.

The loans were primarily 10 years long at origination (15-year terms are offered under special circumstances to qualified borrowers, and 20-year financing is offered to Ritz Carlton Club loans and Marriott Grand Residence Club borrowers) and are fixed rate. The weighted average original term of the current pool is 142 months, compared to 139 months for last transaction. Given the three additional months of seasoning, the weighted average remaining term are the same at 135 months for both 2005-1 and 2004-2 transactions. The rest of the characteristics of the receivables as of the statistical cut-off date is comparable to the pool securing the company's last securitization, 2004-2, on a weighted average basis, with the coupon rate of 12.23%, down payment of 12.44%, and foreign obligors of 5.29%. The pool is geographically diversified with California having the largest obligor concentration at 26%, with New York the next largest at 6%. The last deal was also geographically diversified with the largest state being California at 29%. There is good property diversification in this deal with the three largest properties comprising 11.3%, 9.1%, and 7.9% of the pool.

REDUCED GROSS DEFAULT EXPECTATION PRIMARILY BASED ON THE SECURITIZED DEAL PERFORMANCE

Moody's expects this transaction will perform in line with MVCOT 2004-1 and 2004-2, given their similar characteristics. Although the transactions are still early in their life, it appears that both 2004-1 and 2004-2 transactions could perform better than expected. Expected term transaction performance is further supported by the quarterly static pool cumulative gross default experience provided by the company . Additionally, the transaction will also be helped by the exclusion of loans delinquent greater than 30 days.

To date, MORI's other outstanding transactions have generally been performing well. The cumulative gross defaults for the 2000-1 transaction is 6.90% at month 52 with 19.88% pool factor, which Moody's projects to an ultimate gross defaults of less than 9%. Similarly, the cumulative gross defaults of 4.27% at month 29 with 49.32% pool factor suggests similar, if not lower final cumulative gross defaults for the 2002-1 transaction.

SIMILAR STRUCTURE WITH SLIGHTLY LOWER CREDIT ENHANCEMENT

The MVCOT 2005-1 deal has a senior-subordinated, pro rata pay structure, which is similar to the last transaction. The transaction switches from pro rata to sequential and all excess spread is paid as principal, during the time that a trigger event exists. A trigger event will occur if (i) delinquencies of greater than 60 days averaged over the last three due periods equal or exceed 4.50%, (ii) defaults equal or exceed 0.75% of the outstanding balance averaged over the last three due periods, or (iii) cumulative gross charge-offs since the closing date exceed 22% of the original aggregate Notes balance.

Similar to the 2004-1 and 2004-2 transactions, the 2005-1 deal will benefit from a pre-completion loan reserve account, which is created to mitigate pre-completion loan default risk caused by non-completion or delayed completion of the related resort(s). There is also a non-declining reserve fund that provides liquidity and credit enhancement for all the classes, sized at 0.50% of the initial pool balance. .

In addition, Class A, B, and C Notes have further protection provided by subordination of the Classes of Notes with lower distribution priorities. Accordingly, Class A, B, and C will have 17%, 12.5%, and 6% subordination, respectively. As a comparision, the subordination for Class A, B, and C in the 2004-2 transaction were 18.5%, 14%, and 7%, respectively.

Combined with lower excess spread due to higher coupon rates, the MVCOT 2005-1 transaction will have lower total credit enhancement compared to its last transaction , which is consistent with its reduced gross default expection.

THE COMPANY

Marriott, through its wholly-owned subsidiary MORI which is located in Orlando, Florida, has been in the timeshare business since 1985. MORI is the servicer in this transaction and is an acceptable servicer.

Additional research is available on www.moodys.com.

New York
Jay Eisbruck
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Yan Yan
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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