GovGex October Update SBA Secondary Market Update
Premiums remain near 110% in October
The GovGex Index™ continued to edge upward in the 25-year loan category during the month of October, while 10-year loans dropped slightly from their September highs. Several fully priced deals traded at or slightly above 110%, with some bidders offering servicing fees above the 1.0% minimum once the 110% premium threshold was crossed. In other good news, new buyers have entered the market for SBA loans and are providing competitive bids for specific loans.
* Note that the SBA retains 50% of any premium above 110%. This amount is collected by the FTA. Some buyers choose to offer 110% premiums with additional servicing as an alternative. For example, 110% with 1.09% retained servicing.
Below is recent price and trend information on SBA loan sale premiums as reported by the GovGex Independent Pricing Service. GovGex Transactions shows actual bids received on loans presented for sale through GovGex. GovGex Index shows what a Prime + 2 loan of the given term that had just been funded would sell for in each month. The GovGex Index robustly captures month-to-month pricing trends, while also controlling for factors including the age of the loan at the time of sale. For 10 year loans, the GovGex Index premium slid 30 basis points between September and October, and for 25 year loans, the premium rose over 30 basis points.
| GovGex Index™ P + 2% |
GovGex Transactions (October) |
| Month |
10 Year |
25 year |
August
|
106.7%
|
107.3% |
September
|
106.9%
|
107.6%
|
| October |
106.6%
|
107.9%
|
|
|
|
|
| Deal Term |
Premium |
25
|
110.09% |
25
|
110.00%
|
| 10 |
109.89% |
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Note: the GovGex Index information above represents aggregated data. Subscribers of the GovGex Independent Pricing Service™ receive regular updates of actual transactions and bid levels on GovGex - including loan details and high premium and par bids. Recent reports show P+2.75 transactions at 107% to 110% range, with only slight changes in loan structure driving premiums. Lenders use the pricing service to structure deals in light of what the market is currently valuing. The GovGex Independent Pricing Service is the only service to provide actual bid levels based on loans presented for sale on GovGex.
About GovGex.com
GovGex is the secure online exchange for selling SBA and USDA loans. GovGex works with a network of over 30 Buyers, including the leading pool assemblers who are so critical to providing liquidity to small business lenders – a vital engine for American growth. GovGex is an independent source for secondary market pricing information - built on actual bid levels as seen on GovGex. Contact GovGex for all of your secondary market needs.
To learn more, or for free membership, visit www.GovGex.com, or contact us at (617) 381-4906.
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