CBPP3 portfolio growth fell to Eu5.327bn in December, the lowest increase across a whole month since the programme began, with analysts attributing the slowdown to a decrease in issuance, while amortisation adjustments were cited in explanations of a fall in the total in the week to Friday.

European Central Bank figures show that settled and outstanding purchases under its third covered bond purchase programme increased Eu1.545bn to Eu143.364bn in the week to 18 December and by Eu452m to Eu143.816bn in the week to 25 December.

Figures released yesterday (Tuesday) show that the value of the portfolio then decreased Eu476m to Eu143.34bn in the week to last Friday, following a two week suspension of buying from 22 December to 1 January and, according to analysts, because of amortisation adjustments the ECB makes at the end of each quarter.

The ECB says the amortisation emerges from an accounting principle that implies that securities purchased at prices below face value have to be revalued upwards over time towards maturity, and revalued downwards over time if purchased at prices above face value.

Taking into account the quarterly amortisation adjustments and according to month-end figures released by the ECB yesterday, the CBPP3 portfolio increased Eu5.327bn in December, the lowest increase across a whole month since the programme began. Analysts said the reduced pace of purchases reflected reduced primary market supply, rather than a change in approach from the Eurosystem.

“The CBPP3 will not be phased out, they will continue to buy,” said Florian Eichert, head of covered bond and SSA research at Crédit Agricole. “Monthly volumes could very well fall into the Eu7bn-Eu8bn range during 2016, but that is more to avoid distorting secondary markets too much, as long as the PSPP is able to generate sufficient volumes, than about the ECB abandoning the whole purchase programme over time.”

ECB figures also showed that 74.22% of the CBPP3 portfolio had been bought on the secondary market as of 31 December, and 25.78% on the primary market.

As well as under CBPP3, purchases under the overall asset purchase programme (APP) were paused from 22 December to 1 January, with buying resuming on Monday. The PSPP portfolio increased Eu42.473bn in December, with holdings decreasing Eu1.836bn in the week to last Friday because of quarter-end amortisation adjustments.

The PSPP portfolio had in November experienced a high of Eu55.1bn of purchases in a month, with the ECB having said that it would be front-loading buying ahead of an anticipated decrease in market liquidity going into the year-end.