July 19, 2016
SBA Hot Topic Tuesday — CPR Report: SBA 7(a) Prepays Stay Above 8%
By Bob Judge
Editor, CPR Report
In May, prepays stayed above CPR 8% for the second month in a row, rising by 6%.
The cause of this increase was a single-digit increase in both defaults (CDR) and voluntary prepayments (CRR).
Specifically, defaults rose by 7% while voluntary prepayments moved up by 6%.
For the record, defaults have remained below CDR 2% for 33 months in a row.
Turning to the details, overall prepayments rose by 6% to 8.74% from 8.25% the previous month.
In comparing YOY prepayment speeds for 2016 versus 2015, the YTD is currently 0.03% higher than last year, CPR 7.580% versus CPR 7.577%.
As for the largest sector of the market, 20+ years to maturity, prepayment speeds rose by 13% to 8.70% from 7.71%.
Regarding the CPR breakdown, the CDR increased to 1.29% from 1.20% while the CRR rose to 7.45% from 7.05%.
Preliminary data for next month suggests that prepayments will drop a bit, but stay above 8% for a third month in a row.
Regarding our maturity buckets, prepayment speeds rose in two out of six categories.
Increases were seen in the
Decreases were seen, by order of magnitude, in the 13-16 year sector (-80% to CPR 0.93%), 16-20 (-9% to CPR 6.90%), 8-10 (-8% to CPR 9.46%) and 10-13 (-4% to CPR 9.22%).
Prepayments seem firmly entrenched in the 8% to 9% range for the foreseeable future.