Buying of covered bonds under the ECB’s new covered bond purchase programme (CBPP2) is said to have commenced after central banks circulated related documents and began making enquiries of dealers.

Covered bond market participants this (Tuesday) morning said that central banks had started making enquiries about offers, and one said that they had started buying covered bonds, although in very modest amounts.

A syndicate official said that the Bundesbank had on Friday circulated templates to dealers that central banks would use to assess offers, and he said that he assumed all dealers would have provided the necessary information.

He said he expected the covered bond purchase programme to be focussed on the primary market, and that while deal execution would mainly be “business as usual” it will be eased by central banks’ involvement under the scheme, which “is already something valuable”.

Uncertainly over whether or not the Eu40bn programme will be weighted towards peripheral covered bond markets remains.