SBA Update

April 9, 2018

While most bond market sectors languished last week and portfolio managers eased into a new business quarter, the SBA sector mustered a fair amount of business relative to prior weeks. Speculation about the number of further rate increases always seems to lead to questions about floaters, and this kind of attention resulted in some 7(a) trades. Meanwhile, fixed-rate SBAs attracted some new money to the sector with a combination of elevated supply from the monthly DCPC auction and the recent SBIC auction. Yield spreads versus Treasury and swap curves widened by slightly greater amounts than many competing products during the last two weeks.


Floating-Rate 7(a) Pools


Fixed-Rate (DCPC and SBIC) Pools



Government Guaranteed Loan Trading



Weekly volume for the SBA sector held up better than many others last week. 7(a) floaters received extra attention, as did most floating-rate structures based on the expected trajectory of short-term rates. The monthly DCPC auction added to the recent boost of supply for fixed-rate SBA products, and the tightness of supply for these earlier in the year has at least temporarily been allayed.


James Plunkett

Director of Investment Product Strategies

Vining Sparks

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