SECURITIZED DEBT

9 Months Ended

Sep. 30, 2019



13.	SECURITIZED DEBT

The following table provides detail on our securitized debt, net of unamortized debt issuance costs.



($ in millions)	At September 30, 2019			At December 31, 2018
Vacation ownership notes receivable securitizations, gross⁽¹⁾	$	1,624		$	1,590
Unamortized debt discount and issuance costs	(14		)	(11		)
	1,610			1,579

Warehouse Credit Facility, gross⁽²⁾	56			116
Unamortized debt issuance costs	—			(1		)
	56			115

Other⁽³⁾	20			20
	$	1,686		$	1,714

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⁽¹⁾	Interest rates as of September 30, 2019 range from 2.2% to 6.3%, with a weighted average interest rate of 2.9%


⁽²⁾	Effective interest rate as of September 30, 2019 was 3.3%


⁽³⁾	Non-recourse

See Footnote 17 “Variable Interest Entities” for a discussion of the collateral for the non-recourse debt associated with the securitized vacation ownership notes receivable and our non-recourse warehouse credit facility (the “Warehouse Credit Facility”). The debt associated with our vacation ownership notes receivable securitizations and our Warehouse Credit Facility is non-recourse to us.

Vacation Ownership Notes Receivable Securitizations

On May 23, 2019, we completed the securitization of a pool of $459 million of vacation ownership notes receivable. In connection with the securitization, investors purchased in a private placement $450 million in vacation ownership loan backed notes from MVW 2019-1 LLC (the “2019-1 LLC”). Three classes of vacation ownership loan backed notes were issued by the 2019-1 LLC: $350 million of Class A Notes, $67 million of Class B Notes and $33 million of Class C Notes. The Class A Notes have an interest rate of 2.89 percent, the Class B Notes have an interest rate of 3.00 percent and the Class C Notes have an interest rate of 3.33 percent, for an overall weighted average interest rate of 2.94 percent.

On October 10, 2019, subsequent to the third quarter of 2019, we completed the securitization of a pool of $315 million of vacation ownership notes receivable. Approximately $236 million of the vacation ownership notes receivable were purchased on October 10, 2019 by MVW 2019-2 LLC (the “2019-2 LLC”), and we expect the remaining vacation ownership notes receivable to be purchased by the 2019-2 LLC prior to March 31, 2020. The 2019-2 LLC holds the remaining proceeds, which will be released as the remaining vacation ownership notes receivable are purchased. On November 7, 2019, an additional $44 million of the remaining vacation ownership notes receivable were purchased and $42 million was released from restricted cash. Any funds not used to purchase vacation ownership notes receivable will be returned to the investors. Three classes of vacation ownership loan backed notes were issued by the 2019-2 LLC: $232 million of Class A Notes, $54 million of Class B Notes and $23 million of Class C Notes. The Class A Notes have an interest rate of 2.22 percent, the Class B Notes have an interest rate of 2.44 percent and the Class C Notes have an interest rate of 2.68 percent, for an overall weighted average interest rate of 2.29 percent.

Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable. If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s established parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. During the third quarter of 2019, and as of September 30, 2019, no securitized vacation ownership notes receivable pools were out of compliance with their respective established parameters. As of September 30, 2019, we had 11 securitized vacation ownership notes receivable pools outstanding.

As the contractual terms of the underlying securitized vacation ownership notes receivable determine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown below due to prepayments by the vacation ownership notes receivable obligors.

The following table shows scheduled future principal payments for our securitized debt as of September 30, 2019.



	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Other		Total
($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Other		Total
Payments Year
2019, remaining	$	60	$	1	$	—	$	61
2020	208		3		2		213
2021	190		52		3		245
2022	183		—		2		185
2023	176		—		3		179
Thereafter	807		—		10		817
	$	1,624	$	56	$	20	$	1,700

Warehouse Credit Facility

The Warehouse Credit Facility, which has a borrowing capacity of $250 million, allows for the securitization of Legacy-MVW vacation ownership notes receivable on a revolving non-recourse basis through March 13, 2020. During the first quarter of 2019, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $146 million. The advance rate was 85 percent, which resulted in gross proceeds of $124 million. Net proceeds were $123 million due to the funding of reserve accounts of $1 million.

During the third quarter of 2019, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $67 million. The advance rate was 85 percent, which resulted in gross proceeds of $57 million. Net proceeds were $57 million due to the funding of reserve accounts of less than $1 million.