Settled and outstanding purchases under CBPP3 increased Eu1.824bn in the week to last Friday, reflecting an overall slowdown in buying but increase in secondary purchases, while ECB minutes released on Thursday indicated renewed EAPP front-loading ahead of December holidays.

Figures released yesterday (Monday) afternoon by the European Central Bank show that holdings under the third covered bond purchase programme increased from Eu122.803bn to Eu124.627bn last week. This compared with an increase of Eu2.548bn in the previous reporting period.

Analysts noted that a Eu750m five year Bankinter issue was the only CBPP3-eligible deal to have settled last week. They estimated that the Eurosystem bought around 40% of the deal, implying average secondary market purchases of Eu305m-Eu315m per day – up from Eu100m-Eu120m in the previous reporting period, but not enough to compensate for the fall in primary market activity.

Joost Beaumont, senior fixed income strategist at ABN Amro, also noted that secondary purchases are well below the daily average for the year, of around Eu400m.

“This could be an early sign that the central bank is reducing its reliance on the secondary market,” he said. “As such, a slight drop in the monthly amounts of covered bond purchases in coming months seems to be on the cards, although it is too early to draw any firm conclusions yet.”

The ECB on Thursday released minutes of the governing council’s 2-3 September meeting in which it was recorded that, according to ECB executive board member Benoît Cœuré, purchases under the expanded asset purchase programme (EAPP) will again be “somewhat frontloaded” in September to November to prepare for an expected decline in market liquidity in December.

Purchases were front-loaded before the summer and back-loaded afterwards to compensate for an expected lull in market activity. In July, ECB president Mario Draghi said the frontloading of purchases had amounted to Eu3bn in May, Eu3bn June and would by slightly less in July.

The public sector purchase programme (PSPP) portfolio meanwhile increased Eu12.459bn last week, up from a historical low of Eu8.436bn in the previous reporting period.

Bernd Volk, head of covered bond and agency research at Deutsche Bank, said the pace of PSPP over September and October is so far is in line with the buying seen before the market slowdown in August, suggestive of a similar front-loading.