May 11, 2020
Summary of Paycheck Protection Program Round 2 (data as of May 10, 2020)
Through May 10th, $188.03 billion in PPP loans have been approved by the SBA in the second round of funding, totaling 2.575 million small business loans through 5,428 participating lenders. The average loan size of round two of PPP is $73,017.
Fixed-Rate DCPC Pools
- Supply in the secondary market for DCPC product has been light the last several weeks. New issuance in the market from the auction last week benefited SBAP liquidity.
- Current yield spreads in SBA DCPCs remain wide but tightened last week. Spreads generally range from 70 to 110 bps for new and seasoned DCPCs.
- The May fixed-rate SBA DCPC auction held last Thursday drew strong investor interest as they offer superior convexity profiles to most residential MBS alternatives, while offering comparable yields and spreads.
- The May fixed-rate SBA DCPC auction included 10-year, 20-year, and 25-year maturities.
- Total issuance in the May auction of $409.9M declined $11.3M (-2.7%) from the prior month, which was the highest level of issuance since July 2013.
- Yield spreads tightened in the May auction but remain wider than the twelve-month average for all maturity terms.
- Spreads tightened 21 bps month over month for the longer maturity terms (81 bps yield spread for the 25-year term and 68 bps for the 20-year term).
Floating-Rate 7(a) Pools
- It is critically important to evaluate pools at a wide variety of speeds and using a prepayment vector. Our Performance Profile includes an analysis of your 7(a) pools layered against a historical prepayment vector. Please let your Representative know if you would like to run a Performance Profile.
Dan Stimpson, CPA
Senior Vice President, Investment Strategies
Vining Sparks IBG, LP