CBPP3 purchases registered a further slowdown last week, leaving the Eurosystem on track to purchase a meagre Eu2bn of covered bonds in December, analysts estimate, while overall APP buying also fell despite the ECB having flagged that it would be frontloaded before a pause on Thursday.

Figures released yesterday (Monday) afternoon show that settled and outstanding purchases under CBPP3 increased Eu264m, from Eu203.692bn to Eu203.956bn, in the week to last Friday. Redemption figures published this afternoon show that Eu300m of CBPP3 holdings matured last week, implying gross purchases of around Eu564m.

Gross purchases therefore fell slightly from around Eu674m in the previous week.

One CBPP3-eligible deal settled last week, a Eu1bn cédulas for Deutsche, of which analysts estimated the Eurosystem bought around Eu260m. This implies gross average secondary market purchases of around Eu60.8m per day last week, compared with Eu134.8m per day in the previous week.

Last week was the final full week of Eurosystem purchases this year, as the ECB will temporarily pause the asset purchase programme (APP) on Thursday. Purchases will resume on 2 January.

The ECB has said its QE buying would be frontloaded during the period 29 November to 21 December, but analysts noted that net APP purchases had fallen since the start of December, totalling Eu17.6bn last week after Eu18.5bn in the previous week.

“With overall APP purchases of just Eu44.7bn since the end of November, there is actually no sign of the announced frontloading,” said Frank Will, global head of covered bond research at HSBC. “On the contrary, December’s daily average in overall purchases is even lower than in October and November – where we had seen above-average purchases of around Eu85bn per month.”

Analysts estimate the Eurosystem is on track to record gross covered bond purchases of around Eu2bn this month – which would be the lowest ever monthly total under the programme.

“Both the high redemptions and the quarterly adjustments will have a negative effect on net purchases, which should end up much lower than the current figure, and we will probably get the lowest net purchases – and maybe even the lowest gross figure – since the start of the CBPP3,” said Will.

“Due to the low gross purchases, the monthly net secondary market purchases – including the negative quarterly adjustments and the redemption volume – could end up being slightly negative for the first time since the start of the CBPP3.”