The Eurosystem bought more covered bonds in the secondary market in the space of a week in its latest reporting period than at any time since August, according to estimates based on ECB figures released yesterday (Monday), while the pace of its corporate programme continues to impress.

According to figures released by the European Central Bank yesterday (Monday) afternoon, settled and outstanding purchases stood at Eu182.988bn as of Friday, up Eu1.919bn from Eu181.069bn a week earlier.

Further figures released this (Tuesday) afternoon showed that the net increase comprised Eu2.2bn of purchases and Eu0.2bn of redemptions (today’s figures are in billions and only given to one decimal place).

Noting that two eligible issues settled in the relevant period – a Eu1bn nine year Caffil issue and a Eu250m January 2023 UBI Banca tap, Crédit Agricole analysts estimated that that primary purchases comprised Eu560m of the gross buying. This implies daily average secondary purchases of around Eu312m, which is the highest rate since August 2015, according to Crédit Agricole figures.

Some market participants had suggested that CBPP3 purchases might ease once the ECB launched its corporate sector purchase programme (CSPP) this month, with an overall monthly target of Eu80bn since April, although some have suggested the ECB may in general be frontloading ahead of the summer lull, as it did last year.

No eligible new benchmarks settle in the period the ECB will report on next Monday, meaning that its figures will comprise only secondary buying. However, it is set to reflect a quarterly amortisation adjustment.

The CSPP portfolio increased Eu2.65bn, from Eu2.248bn to Eu4.898bn, in the week to last Friday, with the acceleration in buying beating expectations.

“This is a really fast start and confirms that the ECB is heading for the Eu10bn pace in secondary alone!” said ING analysts. “They have now bought close to Eu5bn in 11 trading days, which is equivalent to Eu9.4bn monthly. Only a small part can be primary due to a limited amount of eligible deals.”

However, they warned that the CSPP could have a crowding-out effect in the corporate bond market similar to that described in the covered bond market since the advent of CBPP3.

“This pace is too hot to handle,” they said, “and will still, despite Brexit, lead to the squeeze that we continue to expect.”

The public sector purchase programme (PSPP) rose from Eu851.670bn to Eu868.811bn and the ABS purchase programme from Eu19.558bn to Eu19.658bn.