Covered bonds bought under CBPP3 rose Eu3.008bn in the week to last Friday, according to ECB figures published yesterday (Monday), with analysts noting the increase was larger than in the previous week because of an increase of primary supply rather than more aggressive secondary buying.

Monday’s figure, which includes purchases settled and still outstanding as of Friday, took the European Central Bank’s third covered bond purchase programme to Eu45.954bn as of Friday, up from Eu42.946bn at the end of the previous week.

Four CBPP3-eligible deals settled last week – a Eu1bn Belfius 10 year, a Eu750m BPCE seven year, a Eu500m HSH Nordbank three year and a Hypo Landesbank Vorarlberg 10 year sub-benchmark –with supply totalling Eu2.55bn, up from Eu2.25bn in each of the previous two reporting periods.

Based on order book statistics, analysts at Barclays estimated the ECB bought around Eu720m, or 28%, of the deals, suggesting that the remaining Eu2.286bn came from secondary purchases. This, they added, lifted average daily purchases from Eu538m during the previous week to Eu602m in the latest week.

However, the accelerated pace was mainly driven by an increase in eligible primary settlements rather than more aggressive CBPP3 buying in the secondary market, according to Jussi Harju, covered bond analyst at Barclays.

“Indeed, we estimate that the average daily secondary purchases in the latest reporting period increased only by Eu10m to Eu457m,” he added.

“That said, CBPP3 was slightly more aggressive in the primary deals that settled this week compared to the week before – average estimated take-up was 28% compared to 20% in the previous reporting period, though the latter was the lowest take-up recorded since the programme started.”

Next week only two CBPP3-eligible deals will settle – a Eu1bn CFF five year and a Eu500m NordLB four year – totalling Eu1.5bn. Analysts at Crédit Agricole estimated that the ECB’s participation in these deals will be smaller than in last week’s, at Eu356m, equivalent to an average 26% of allocations.

“Consequently we would expect the CBPP3 to continue at a secondary market pace of around Eu500m and the overall figure coming in maybe slightly below this week’s,” said Florian Eichert, senior covered bond analyst at Crédit Agricole.