Settled and outstanding CBPP3 purchases increased Eu1.993bn last week, as portfolio growth slowed for the second consecutive week in spite of an increase in secondary buying, but analysts expect the pace to rebound in the next reporting period after an increase in primary market activity.

European Central Bank figures released yesterday (Monday) show settled and outstanding purchases under the third covered bond purchase programme increased from Eu118.262bn to Eu120.255bn in the week to last Friday. Purchases totalled Eu2.155bn in the previous reporting period.

Some Eu2bn of CBPP3-eligible primary supply settled last week, of which the Eurosystem bought around Eu800m-Eu900m, according to analysts’ estimates. This implies the Eurosystem bought a daily average of around Eu210m-Eu240m on the secondary market, an increase from the previous reporting period, they said.

“Although the pace of secondary purchases increased,” said Jussi Harju, analyst at Barclays, “this is a far cry from the long term average of Eu416m since the start of the programme – adjusted for holidays.”

Joost Beaumont, senior fixed income strategist at ABN Amro, added that central banks could have slowed buying activity because of a widening trend in covered bond spreads over recent weeks.

“Repricing could have put the Eurosystem in wait and see mode,” he said, “although it could also reflect that it encounters more difficulties in finding paper.”

Noting that Eu5.25bn of CBPP3-eligible supply will settle this week, of which the Eurosystem is estimated to have bought around Eu2bn, analysts said the pace of CBPP3 buying should increase.

ECB figures released yesterday also showed that public sector purchase programme (PSPP) purchases increased Eu11.161bn to Eu337.879bn, after an increase of Eu12.249bn in the previous reporting period.