CBPP3 buying registered a slight increase in pace last week, with gross purchases up around Eu207m from the previous week, but analysts noted that volumes were still in line with post-summer lows and said this was a reflection of the programme’s less prominent role in ECB QE.

European Central Bank figures released on Monday afternoon show that settled and outstanding purchases under CBPP3 increased Eu1.156bn, from Eu196.490bn to Eu197.646bn in the week to last Friday.

Portfolio redemption figures published yesterday (Tuesday) afternoon show that no CBPP3 holdings matured last week, suggesting that gross purchases were in line with the net portfolio growth. This compares with gross purchases of around Eu949m in the previous week, when around Eu300m of CBPP3 holdings matured.

Around Eu620m of the gross purchases were bought on the primary market, analysts estimated, out of a total of Eu2.25bn of CBPP3-elgible supply that settled last week. This implies average secondary market purchases of around Eu107m per day last week.

This represents one of the slowest secondary buying rates under the programme and is only a modest increase on the previous week, in which analysts’ estimates of average secondary market purchases ranged from Eu65m to Eu100m per day.

Bankers said the low secondary volumes reflect the Eurosystem’s increasing difficulties in finding bonds on the secondary market, something flagged by ECB governing council member Ewald Nowotny last week (24 October) when he said that CBPP3 has reached “limits”.

Bernd Volk, head of covered bond and SSA research at Deutsche Bank, suggested the ECB could nonetheless continue its covered bond purchases while its overall asset purchase programme (APP) is still running, in order to keep more flexibility, but said the figures show that the programme is no longer as important as it once was.

“In recent weeks, ECB CBPP3 purchases were at the lowest since the programme started,” he said. “Average weekly purchases under CBPP3 have amounted to Eu1bn since July, compared with Eu1.7bn in the first half of 2016.

“The volume of covered bonds purchased under CBPP3 as a percentage of volume purchased under PSPP was at 6% in September, the second lowest since the start of PSPP, compared with a high of 26.2% in March 2015. Overall, CBPP3 is no longer crucial for ECB QE.”