The pace of growth of the CBPP3 portfolio increased last week after hitting two consecutive weekly lows, rising Eu1.937bn ahead of an anticipated pick-up in buying on the back of the post-summer primary market reopening, while redemptions have been flagged by one analyst.

Settled and outstanding purchases under the European Central Bank’s third covered bond purchase programme rose to Eu111.116bn as of last Friday from Eu109.179bn a week earlier, according to figures released by the ECB yesterday (Monday) afternoon.

The Eu1.937bn increase comes after consecutive lows of Eu1.414bn and Eu1.120bn, excluding the first days of the programme and a two week holiday suspension of the programme at the turn of the year.

“While this is still below the average of Eu2.4bn, given that only a new Eu200m Crédit Agricole tap was settled last week, CBPP3 was hardly low regarding secondary market purchases,” said Bernd Volk, head of covered bond and agency research at Deutsche Bank.

He also highlighted redemptions of Eu200m of holdings under each of CBBP2 and CBPP3 disclosed by the ECB last Tuesday (25 August).

“While redemptions are not surprising regarding the closed CBPP2,” he said, “given that CBPP3 only started in October 2014, Eu200m of redemptions last week are noteworthy, showing that the weekly CBPP3 increase of Eu1.12bn underestimated actual CBPP3 purchases by Eu200m.”

Market participants have typically assumed no redemptions in their calculations of CBPP3 buying, although the ECB has previously disclosed figures that have revealed redemptions.

“However, in our view, redemptions during the time CBPP3 is active should remain low,” he added, “i.e. the differences between CBPP3 purchases and reported weekly increase are unlikely to be significant.”

Crédit Agricole Home Loan SFH reopened the primary market after a four week summer lull last Thursday with a Eu1.25bn long six year deal that settles on Wednesday of next week (9 September) and that and other new issues launched in its aftermath are expected to result in higher weekly CBPP3 figures from the week after next.

According to Joost Beaumont, senior fixed income strategist at ABN Amro, the Eurosystem needs to step up overall asset purchases to put itself back on track.

“Overall, the Eurosystem has settled Eu49bn of asset purchases so far in August,” he said yesterday. “Adding roughly Eu2.5bn for today’s settlements, suggests that total purchases in August will amount to around Eu51.5bn.

“This would be some Eu8.5bn less than its target, and more than offsetting the Eu3bn of frontloading seen in June/July. This suggests that the Eurosystem needs to become a more aggressive buyer in the coming weeks in order to ‘repair’ the shortfall.”

The ECB has said that alongside its front-loading it plans to back-load to compensate for the summer slowdown.