SBA Prepay Commentary

January 2021 SBA Prepayment Speeds

In a time where the only thing to expect is the unexpected, SBA prepayment speeds did not disappoint. While the fall and winter seasons have historically been times of decreased prepayments, this year has seen speeds pick up over that period. Considering the increasing availability of the COVID-19 vaccine and another round of stimulus checks from the federal government, it would appear that business owners have begun feeling more confident in their future sales since the pandemic began, but their confidence has recently moderated and even slightly declined. If this continues to increase, said optimism would contribute to upward pressure on prepayments as speeds return to levels more in line with historical standards.

Equipment loan pools’ prepayments increased from 11.9 to 13.8 CPR, which includes pickups among every vintage. Real-estate loan pools also saw an increase, going from 11.0 to 12.3 CPR, though results were mixed on a vintage-by-vintage basis.

Equipment Loan Pool CPRs

1Equipment loan pools have original WAMs between 8 and 13 years

Real-Estate Loan Pool CPRs

2Real-estate loan pools have original WAMs greater than 18 years

SBA Prepayment Tables (PDF)

Prepared according to methodologies described by SIFMA.

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Adam Hofer

Analyst, Investment Product Strategies

Vining Sparks

Kevin A. Smith, CFA

SVP, Director Investment Product Strategies

Vining Sparks

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.
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