SBA Prepay Commentary
November 2020 SBA Prepayment Speeds
SBA prepayment speeds have continued to counter their seasonal trends, as November brought yet another increase that was widely experienced among vintages for both pool types. In fact, another increase of this size next month would put both pool types directly in line with their speeds from last December. This winter could continue to see an increase in prepayments as optimism is beginning to grow for small businesses with the announcement of two potential COVID-19 vaccines, one from Pfizer and BioNTech and another from Moderna, becoming available in the coming months.
Equipment loan pools’ prepayments increased from 8.5 to 12.7 CPR, with most individual vintages also seeing an increase in speeds. Real-estate loan pools also rose, going from 6.7 to 11.5 CPR, their second-straight increase after declining for eight of the first nine months this year.
Equipment Loan Pool CPRs
- Most vintages saw an increase in speeds this month.
- The largest increase was seen by the 2011 vintage, which rose from 30.0 to 58.7 CPR.
- Every vintage’s prepayments are now above both their 6- and 12-month average speeds.
|1Equipment loan pools have original WAMs between 8 and 13 years|
Real-Estate Loan Pool CPRs
- After steadily declining for eight months from January to September, real-estate loan pools’ overall prepayment speeds have now increased for a second-straight month.
- Most individual vintages experienced an increase in prepayments.
- The largest increase was experienced by the 2012 vintage, which rose from 2.1 to 13.8 CPR.
- Almost all vintages are above their 6-month averages and are mixed when comparing to their 12-month averages.
|2Real-estate loan pools have original WAMs greater than 18 years|
Prepared according to methodologies described by SIFMA.
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“The timetable suggests the vaccine could go into distribution this month or next, though U.S. health regulators have indicated they will take some time to conduct their review. Then it will take months for the companies to make enough doses for the general population.”
“If regulators do authorize the vaccine, the initial supply of doses will be limited—20 million, or enough for 10 million people, by the end of the year, Moderna forecasts. The federal government may decide to vaccinate health-care workers and first responders first, followed by other segments of the population in phases until more doses are made next year.”
Analyst, Investment Product Strategies
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies