We help banks, credit unions, and asset managers energize their portfolios and reduce volatility.
- Trade highly sought-after variable-rate government-guaranteed paper
- Offer alternative strategies for clients to capitalize on the SBA/USDA market
- Provide traditional fixed income financial services
From the desk of Joel Banes November 2018
From 2008 to 2016, interest rates were consistently low, while SBA prepayment speeds were relatively stable. In that environment, it was expedient to use a “standard” prepayment speed and ignore the use of a “vectored” prepayment speed when projecting potential yield for an SBA Pool. That said, we have always advocated for the benefit of utilizing vectored payment speeds to evaluate SBA Pools.
In October 2017, the SBA changed the way it passes through the embedded principal which exists in seasoned pools to the SBA registered holders. The following will demonstrate why we believe the use of vectored prepayment speeds is even more advisable following this change. To appreciate the difference between SBA prepayment speeds and vectored prepayment speeds, consider the data. See More
Those are my thoughts. Always happy to discuss. JOEL BANES (901) 261-5950