Prepay Commentary

March SBA Prepayment Speeds



March 14, 2018

 

Overall speeds for SBA floating-rate pools fell last month by almost 2CPR for equipment loan pools and declined by almost 2.5CPR for longer-amortization real-estate pools. In the case of equipment pools, the decline more than offset last month’s 1.1CPR increase. Real-estate pool speeds declined last month by a meager 0.1CPR, so a second monthly decline doesn’t reveal any sort of trend. After taking this decline into account, speeds remained consistent enough with the overall patterns of the previous five months that most changes can be attributed to monthly calendar and day count, seasonality in general, and statistical noise. For many SBA 7(a) portfolios, the seasoning ramp resulted in more significant changes since October than any monthly trends.

While still statistically noisy, six months of data present a useful picture of prepayment patterns that can be expected over the life of an SBA pool. Any investors using this history to derive expectations should be wary of statistical noise still in the data and also should be cognizant of potential impacts of seasonal patterns likely to emerge over the coming months. That being said, the below graphs show an emerging picture of the CPRs occurring over the various vintages arranged with the most recent vintage on the left, so as to depict the prepayment patterns occurring on both equipment and real-estate pools. As more monthly data comes in, these patterns should provide a picture of SBA prepayments that proves useful as well as interesting.

 

 

 

SBA Prepayment Tables (Click for Details)

Prepared according to methodologies described by SIFMA.

 








 

 

 

Strategic Insight: Four Months In, SBA Prepayments

 



James Plunkett

Director of Investment Product Strategies

Vining Sparks


Amanda Noa

Vining Sparks


INTENDED FOR INSTITUTIONAL INVESTORS ONLY.
The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
Member FINRA/SIPC
This is a publication of Vining-Sparks IBG, L.P.
775 Ridge Lake Blvd., Memphis, TN 38120