SBA Prepay Commentary
March 2020 SBA Prepayment Speeds
SBA 7(a) prepayment speeds decreased slightly for the month of March, due in part to February only having 19 business days. Equipment loan pools experienced a small drop overall, going from 17.6 to 17.0 CPR, with individual vintages experiencing similarly small changes. Real-Estate loan pools decreased from 18.9 to 18.4 CPR, though results were more mixed amongst vintages.
While prepayments have historically begun to pick up in the spring and summer, that may not be the case this year. Certainly, the coronavirus will impact businesses to some degree, the exact impact will vary based on a number of events, most of them unknowable. In the short-term, it seems reasonable that prepayment speeds will likely decline as many businesses will prefer to stockpile liquidity than pay down debt.
Equipment Loan Pool CPRs
- Most vintages saw a slight decrease in prepayments, with 2011 pools being the only notable exclusion.
- After the last few months of experiencing prepayments above 6- and 12-month averages, speeds have now fallen to be more in-line with said averages.
Real-Estate Loan Pool CPRs
- Prepayments were mixed across vintages, with 2010 vintages seeing the largest increase (12.0 to 29.8 CPR) and 2012 vintages seeing the largest decrease (21.1 to 9.7 CPR).
- As with last month, speeds across individual vintages were mixed when compared to their 6- and 12-month averages.
Prepared according to methodologies described by SIFMA.
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies
Analyst, Investment Product Strategies