SBA Prepay Commentary
March SBA Prepayment Speeds
In total, Equipment and Real-Estate SBA 7(a) pools posted mixed results. CPRs for the Equipment pool population broadly increased from 13.6 to 14.5. Real-Estate speeds were virtually flat month-over-month coming in at 15.6 compared to 15.8 in the prior month. Depending on the Real-Estate vintage considered the story can vary though.
Equipment Loan Pools
- Last month we wrote of “the nearly 6 CPR decline in the 2017 vintage…” and that we’d “expect the 2017 vintage to revert back towards the mean”. This month they bounced right back to their 6mo average (13.3 vs 13.0 CPR).
- This month, holders of 2013 and 2014 vintages should be pleased with the large declines month-over-month. I expect this will be a temporary break, though.
Real-Estate Loan Pools
- Real-Estate speeds by vintage were not uniform at all this month.
- Last month, the 2015 vintage CPR was off by nearly half the prior month (17.3 vs 30.0). It posted a 25.1 CPR this month in line with historical expectations.
- The 2016 vintage slowed for the second month in a row. It will be interesting if it slows or even maintains next month.
Prepared according to methodologies described by SIFMA.
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies
Analyst, Investment Product Strategies