SBA Prepay Commentary
August SBA Prepayment Speeds
In total, Equipment and Real-Estate SBA 7(a) posted mixed CPRs for August. CPRs for the Equipment pool population declined to 17.0 CPR from 17.7 CPR in July. The decline in Equipment pool CPRs was largely driven by more seasoned vintages (2012-2015) that slowed down month-over-month, but are all still paying above 20 CPR. Real-Estate speeds increased to 20.1 CPR from 18.1 CPR in July and were driven by more broad-based increases. From a practical standpoint, we will be interested to see if we experience any broad-based slowing of speeds over the next few months as business owners, in otherwise good shape, may choose to stockpile liquidity in what is becoming a more volatile economic and business landscape.
Equipment Loan Pool CPRs
- Most vintages saw speeds decline, but newer vintages saw increases.
- The tendency for speeds to increase as loans season, early on, is well established.
Real-Estate Loan Pool CPRs
- Broader-based increases across vintages.
- 2018 vintage pools reversed what was a three-month trend of declines.
Prepared according to methodologies described by SIFMA.
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies
Analyst, Investment Product Strategies