CBPP3 purchases fell to their lowest ever monthly total in December, with gross buying down to around Eu2.269bn and the net increase even smaller after a quarter-end amortisation adjustment that caused the portfolio to register a Eu587m contraction last week.

European Central Bank figures show that settled and outstanding purchases under its third covered bond purchase programme increased Eu147m, from Eu203.956bn to Eu204.103bn, in the week to 23 December. Around Eu200m of CBPP3 holdings matured that week, implying gross purchases of around Eu347m in a week of reduced market activity and in which APP buying ended early, on Thursday 22 December, ahead of a year-end suspension of QE purchases.

ECB figures released on Tuesday show the CBPP3 portfolio then decreased Eu587m, from Eu204.103bn to Eu203.516bn, in the week to last Friday. This reflects a quarter-end amortisation adjustment of Eu588m, while no new bond purchases settled and no CBPP3 holdings matured last week.

When the quarter-end amortisation and redemptions of around Eu900m are taken into account, the Eurosystem’s gross covered bond purchases totalled around Eu2.269bn in December – the lowest ever monthly total under CBPP3.

“This is still the lowest monthly number since the start of the CBPP3,” said Florian Eichert, head of covered bond and SSA research at Crédit Agricole, “but it is more in line with our assessment that the Eurosystem buys whatever it can in primary markets and then waits for bonds to be offered in secondary markets without overly aggressively forcing it.”

The ECB had said its QE buying would be frontloaded during the period 29 November to 21 December, but net APP purchases fell throughout December, totalling just Eu60.76bn – well below the Eurosystem’s monthly target of Eu80bn.

CBPP3 purchases are expected to rebound this month on the back of higher volumes of supply. Some Eu10bn of CBPP3-eligible supply has been issued so far this week.