Independent Banker - February 2023 - 42

interest payment initially.
The most recent 10-year SBIC pool
is 2022-10B, issued in September
2022. It is backed by 456 debentures
totaling $1.2 billion, guaranteed
by the SBA. The pool has a stated
rate of 4.262%; its market price
will fl uctuate like any other bond,
although recently it has been
available at a small discount. While
the debentures can prepay, they
don't exhibit the same type of rate
sensitivity that residential MBS do.
Remember that the principal will be
back-loaded, so it's likely that your
original investment will change very
little for several years.
And that's another possible
advantage of an SBIC pool in this
rate environment: the deferral of
principal repayments, while still
off ering a fi nal maturity that's smart
for many community banks. Even
better is that currently the yield
spreads off ered by SBIC's compare
very favorably to alternatives, such as
straight agencies, 10-year MBS and
even taxable municipal bonds.
To recap, Small Business
Investment Company pools check a
lot of boxes for portfolio managers.
Great credit quality, suffi cient
liquidity and average maturities that
sync with most community banks'
risk profi les to name a few. And,
diversifi cation into a new investment
sector is never a bad idea. Wrap all of
these qualities up in a package that
locks in today's yields and you may
have a bond in a sweet spot, just in
time for Valentine's Day.
4(, " $!#%	#%#$ " ΠΠ#!#
 " $!%!&%)#$ %! % $!	#)!#%
#%!&$!#	%% F!#!##!(#$	%! (
!
D
W
Y
! !
Jim Reber, CPA, CFA (jreber@
icbasecurities.com), is president
and CEO of ICBA Securities, ICBA's
institutional, fixed-income brokerdealer
for community banks

Independent Banker - February 2023

Table of Contents for the Digital Edition of Independent Banker - February 2023

Table of Contents
Independent Banker - February 2023 - Cover1
Independent Banker - February 2023 - Cover2
Independent Banker - February 2023 - Table of Contents
Independent Banker - February 2023 - 2
Independent Banker - February 2023 - 3
Independent Banker - February 2023 - 4
Independent Banker - February 2023 - 5
Independent Banker - February 2023 - 6
Independent Banker - February 2023 - 7
Independent Banker - February 2023 - 8
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