CBPP3 outstandings increased Eu2.48bn last week, with analysts noting purchases were up substantially from the previous reporting period despite a shortened four day trading week. PSPP purchases meanwhile eased ahead of an ECB meeting on Wednesday, the first since the expanded QE programme began.

Figures published yesterday (Monday) by the ECB revealed that purchases settled and outstanding under the third covered bond purchase programme as of Friday increased Eu2.480bn, up from Eu1.808bn. The total volume rose to Eu67.150bn, up from Eu64.670bn at the end of the previous reporting period.

Analysts noted that more primary market deals settled during the shortened week than the previous week (which was also shortened) – with a Banco Popular Español Eu1bn trade, a Eu500m UniCredit Bank AG deal and a Eu500m Commerzbank tap taking eligible supply to Eu2bn.

Estimating that the Eurosystem bought around Eu513m (24%) of the three deals, analysts at Crédit Agricole said daily average secondary market settlements also increased to Eu492m from Eu365m the week before.

“Despite the holiday season, the CBPP3 has thus been surprisingly active,” they said.

No CBPP3-eligible deals settle this week, meaning that the next reported increase in the CBPP3 portfolio will comprise only secondary market purchases, analysts noted.

Meanwhile, the Eurosystem last week settled Eu9.159bn of public sector bonds under the public sector purchase programme (PSPP), down from Eu11.506 the previous week, taking the total to Eu61.681bn.

The Crédit Agricole analysts said the shortened trading week did not fully explain the slowdown in purchases, but said not too much should be read into the figures.

“Yes, volumes have come down a bit compared to the start of the PSPP,” they said. “But today’s number is based on a full four settlement days that took place during the Easter holiday period while last week’s four days also still included two days from the previous non-Easter-holiday week.”

Jussi Harju, covered bond analyst at Barclays, suggested that the Eurosystem could be compensating for slower PSPP purchases with more aggressive than usual secondary covered bond purchases.

“Based on the current elevated pace of secondary purchases and no public holidays during the reporting period, the CBPP3 portfolio would grow by approximately Eu3.2bn,” he said. “However, it is uncertain if the Eurosystem can maintain such a high pace of purchases and we expect that the portfolio will more likely grow around Eu2.5bn.”