CBPP3 portfolio growth slowed last week, with no eligible new issuance settling and secondary purchases markedly lower, as bankers said bonds are increasingly difficult to find as the summer break approaches, although a jump in PSPP buying was behind an overall increase in QE settlements.

ECB figures released on Monday afternoon show that settled and outstanding purchases under the third covered bond purchase programme increased Eu530m, from Eu183.570bn to Eu184.100bn, in the week to last Friday. Figures released yesterday (Tuesday) afternoon show that Eu200m of CBPP3 holdings matured last week, implying gross portfolio growth of Eu730m.

In the previous reporting period the CBPP3 portfolio grew by a net Eu582m, although the gross increase came to Eu1.212bn when Eu100m of redemptions and a quarter-end amortisation adjustment of Eu530m are taken into account.

No CBPP3-eligible issuance settled last week, meaning that the ECB bought an average of Eu146m of covered bonds per day on the secondary market. Analysts noted this is markedly lower that the Eu242m per day in the previous week, and one of the lowest secondary purchase figures in recent months.

“It is likely that the central bank encounters some difficulties in finding enough covered bonds to buy, as activity in the primary market as well as the secondary market has slowed down recently,” said Joost Beaumont, senior fixed income strategist at ABN Amro. “Looking forward, this situation is unlikely to change, as we are nearing the quiet summer period.”

However, analysts noted that the pace of the ECB’s overall asset purchase programme (APP) buying increased last week, with increased momentum under PSPP also compensating for a slowdown of CSPP buying.

The public sector purchase programme (PSPP) portfolio was up Eu16.100bn, compared to Eu12.798bn (excluding an amortisation adjustment) in the previous reporting period, while the corporate sector purchase programme (CSPP) portfolio grew Eu1.676bn, down from Eu1.900bn.