Gross CBPP3 buying fell to a record monthly low in July, with analysts attributing the slowdown to a scarcity of issuance, but the Eurosystem still reached its monthly APP target of Eu80bn. However, analysts see purchases falling as much as Eu20bn in August after earlier frontloading.

ECB figures released on Monday afternoon show that settled and outstanding purchases under the third covered bond purchase programme increased Eu593m, from Eu186.041bn to Eu186.634bn, in the week to last Friday.

Portfolio redemption figures released yesterday (Tuesday) afternoon show that Eu400m of CBPP3 holdings matured last week, implying gross purchases of Eu993m. This is roughly in line with gross purchases of Eu934m in the previous reporting period.

Two taps totalling Eu600m were the only CBPP3-eligible deals to settle last week, of which analysts estimated the Eurosystem bought around Eu150m. Accounting for the redemptions in the portfolio, this implies average secondary market purchases of around Eu170m per day last week. In the previous week, analysts estimated average secondary purchases were around Eu125m–Eu150m per day.

Analysts also noted that gross CBPP3 purchases of Eu4.3bn in July – versus net purchases of Eu3.258bn – were the lowest of any month under the programme. The previous low was Eu4.768bn in October 2014, which related to only two weeks of purchases in what was the first month of the programme.

Analysts suggested this was caused mainly by the lack of issuance, after only Eu2.35bn of CBPP3-eligible supply in July, including one benchmark and four taps.

Florian Eichert, head of covered bond and SSA research at Crédit Agricole, noted that, at Eu632m, primary market settlements in July were substantially below the previous low in December 2014 of Eu932m.

“Secondary settlements were low, no doubt, but we have had months with lower overall volumes,” he added.

Portfolio growth across the asset purchase programme (APP) totalled Eu80.586bn in July – around Eu5bn less than in each of the previous three months since the size of the programme was increased, but still a little above the Eurosystem’s higher monthly target of Eu80bn.

The public sector purchase programme (PSPP) portfolio in July increased Eu69.658bn, the corporate sector purchase programme (CSPP) Eu6.816bn, and the asset backed securities purchase programme (ABSPP) Eu854m.

The ECB highlighted that APP buying could be frontloaded to account for the anticipated summer slowdown, and analysts said purchases will likely fall across all programmes this month, albeit temporarily, as liquidity dries up during the European holiday period.

Analysts at Danske Bank said they expect APP purchases to slow to around Eu60bn.

“A slowdown to around Eu60bn would ensure that the average monthly purchases including the H1 frontloading would be in line with the monthly targets,” said Anders Møller Lumholtz, chief analyst at Danske.

He added that he expects the decrease to occur roughly evenly across the programmes.