Cassa depositi e prestiti has purchased some Eu835m of Italian covered bonds and Eu120m of RMBS since December under a Eu3bn purchase programme, with banks appreciating the role being played by the state lender, according to a CDP spokesperson.

The purchase programme was announced in November 2013 as part of an initiative to stimulate residential mortgage lending in Italy, with CDP having set the size of the scheme at Eu3bn, for spending on obbligazioni bancarie garantite (OBG) issues and what was described as “securities of a similar nature”.

As previously reported by The Covered Bond Report, CDP began purchasing OBGs in December, having by early February bought a total nominal amount of Eu550m, with three issues in its portfolio.

A spokesperson today (Wednesday) told The CBR that CDP has since December subscribed to eight issues in the primary market, including RMBS.

“The corresponding volume is Eu835m in OBGs and Eu120m in RMBS,” he said. “At present, four out of eight bonds are still in CDP’s portfolio.”

Under the scheme, CDP will only purchase OBGs in the primary market, subject to eligibility criteria being met, and its involvement is tied to issuers committing to using the proceeds to grant new residential mortgages to Italian residents.

CDP’s OBG purchase programme will run until the state fund’s subscriptions have reached a total of Eu3bn under the scheme, according to the spokesperson.

“Banks still like CDP presence and role and ask for CDP intervention,” he said when asked if any consideration had been given to ending the scheme early in light of factors such as the ECB targeted longer term refinancing operations (TLTROs) and a fall in Italian banks’ borrowing costs on the public bond market.

The CDP spokesperson noted that it appears residential mortgage loans will not count toward banks’ borrowing allowance under TLTROs that the European Central Bank recently announced.