The pace of covered bond purchases under CBPP3 fell unexpectedly last week despite an increase in primary market activity, with the portfolio increasing by Eu1.511bn, but analysts stated that the figure should increase substantially next week as eight eligible deals settle.

Figures released by the European Central Bank yesterday (Monday) show that settled and outstanding purchases under CBPP3 grew by Eu1.511bn to Eu101.686bn in the week to last Friday. This compares with an increase of Eu1.929bn the previous week.

Analysts had expected a sizeable increase in yesterday’s figure as three CBPP3-eligible benchmark deals settled last week, following the reopening of the primary market earlier this month. Eligible benchmark supply totalled Eu1.75bn – from a Eu750m five year LBBW issue, a Eu500m five year from Commerzbank, and a Eu500m eight year from UniCredit Bank.

Estimating that the Eurosystem bought around 20% of these deals, analysts put the pace of secondary market purchases at around Eu220m-Eu235m per day – one of the lowest readings since the programme began.

However, with eight CBPP3-eligible deals totalling Eu5.75bn of supply settling this week, analysts expect next week’s increase to be substantially larger, estimating that the Eurosystem bought Eu1.4bn-Eu1.5bn of the issues.

“This means even at the currently very low secondary turnover we could see one of the higher totals overall this year, certainly going beyond Eu2bn,” said Florian Eichert, head of covered bond and SSA research at Crédit Agricole.

Meanwhile, the pace of PSPP purchases also fell, with the portfolio increasing by Eu10.263bn last week, down from Eu11.271bn in the previous reporting period. This took total settled outstandings to Eu237.88bn.