CBPP3 portfolio growth slowed last week, with the summer holiday period getting into full swing and the ECB seemingly willing to accept lower volumes, according to analysts, although gross purchases were still higher than initially expected given surprisingly high redemptions of Eu400m.

ECB figures released on Monday afternoon show that settled and outstanding purchases under the third covered bond purchase programme increased Eu534m, from Eu185.507bn to Eu186.041bn, in the week to last Friday. In the previous reporting period, gross CBPP3 purchases amounted to Eu1.407bn.

Portfolio redemption figures released yesterday (Tuesday) afternoon show that Eu400m of CBPP3 holdings matured last week, implying gross purchases under the programme of Eu934m. This compares with Eu1.407bn in the previous reporting period.

Two taps with a total volume of Eu750m were the only CBPP3-eligible deals to settle last week. Analysts’ estimates for the Eurosystem’s share of these deals ranged between Eu170m-Eu300m.

Before the release of the redemption figures, analysts said that this implied one of the lowest net secondary purchases figures since CBPP3 began, and said that redemptions would likely be low and make little difference to gross purchases, given that only one CBPP3-eligible benchmark matured last week – a Eu2.3bn issue sold by Crédit Mutuel-CIC Home Loan SFH in July 2011.

However, accounting for the larger than expected redemptions, analysts noted that the fall was not so substantial, with average secondary market purchases of around Eu125m–Eu150m per day, compared to an average of around Eu235m in the previous week.

“While this is still a slowdown compared to last week’s gross purchases of Eu1.407bn it is not as dramatic as it looked on Monday,” said Florian Eichert, head of covered bond and SSA research at Crédit Agricole. “It is good to see the ECB accept a lower volume in times of virtually no liquidity and hardly any new issuance.

“At the same time, the fact that Banque de France managed to buy Eu400m of CM-CIC’s 18 July 2016 issue shows how aggressive overall the CBPP3 has been operating in secondary markets since its inception.”

Other analysts agreed, attributing the fall in CBPP3 buying to the impact of the summer holiday period.

“I think they will slow down their purchases now that the holiday period is getting into full swing,” said Joost Beaumont, senior fixed income strategist at ABN Amro. “But overall, my view is that the ECB will continue to buy around Eu1bn in the secondary market every week, with the weekly total then varying with activity in the primary market.”

The ECB has previously highlighted that asset purchase programme (APP) buying could be frontloaded to account for the anticipated summer slowdown, with total purchases in the last three months exceeding the Eurosystem’s monthly target of Eu80bn by around Eu5bn.

Overall APP settlements fell slightly last week compared with the previous reporting period, down from Eu19.920bn to Eu19.283bn.

The PSPP portfolio was up Eu17.453bn, compared with Eu16.309bn in the previous reporting period, while the corporate sector purchase programme (CSPP) portfolio grew Eu1.422bn, down from Eu1.953bn. The asset backed securities purchase programme (ABSPP) portfolio decreased Eu200m on the back of redemptions.