The pace of CBPP3 portfolio growth accelerated last week on the back of an increase in Eurozone issuance, with gross buying of Eu1.16bn, but while analysts expect a similar boost to purchases next week, overall portfolio growth this month remains on course to fall short of pre-summer levels.

European Central Bank figures released on Monday show that settled and outstanding purchases under the third covered bond purchase programme increased Eu916m, from Eu194.925bn to Eu195.841bn, in the week to last Friday.

Separate portfolio redemption figures released yesterday (Tuesday) afternoon show that Eu100m of CBPP3 holdings matured last week, implying gross purchases of around Eu1.16bn. This compares with gross purchases of Eu621m in the previous reporting period.

Some Eu1.5bn of CBPP3-eligible issuance settled last week, of which analysts estimated analysts estimated the Eurosystem bought around Eu430m – implying average secondary market purchases of Eu146m per day last week. This compares with an average of Eu164.2m per day in the previous week, when no eligible issuance settled.

Analysts attributed the increase in the pace of portfolio growth to the availability of bonds on the primary market. They said buying should register a similar increase in the next reporting period, with Eu1.75bn of CBPP3-eligible issuance settling this week.

However, they said that CBPP3 buying this month remains on course to fall short of the levels of purchases earlier in the year.

“At the current speed, the central bank is on track to buy around Eu3.6bn of covered bonds this month, which would throw covered bond purchases back to levels during the summer lull,” said Joost Beaumont, senior fixed income strategist at ABN Amro. “This suggests that the Eurosystem finds it increasingly difficult to find the paper in the secondary market, making CBBP3 more dependent on primary market activity, which has remained relatively muted.”