Fitch upgrades Hilton Grand Vacations

Fitch Ratings said it upgraded the long-term issuer default ratings for Hilton Grand Vacations, Inc. and Hilton Grand Vacations Borrower LLC (collectively, HGV) to BB from BB-. The agency also boosted the senior secured revolver and term loan to BBB-/RR1 from BB+/RR1 and the unsecured notes to BB/RR4 from BB-/RR4.

“The ratings reflect HGV's strong competitive position as one of the largest timeshare operators and its strong profitability and cash flow profile. This is offset by the potential for macroeconomic headwinds and its impact on the cyclical nature of the timeshare industry, including an increase in defaults of timeshare receivables,” the agency said in a press release.

“Strong growth in HGV's EBITDA and FCF since 2021 has resulted in debt reduction and improved leverage metrics. Fitch's EBITDAR leverage has declined from 6.7x in 2021 to 3.6x in 2022 and is expected to remain in the low mid-3X range during the forecast horizon,” Fitch said.

The outlook is stable.

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