CBPP3 registered another low increase last week, growing just Eu215m as the ECB emerged from a seasonal break to a deluge of primary supply that is not yet reflected in its numbers but which analysts expect to swell next week’s figure, with distribution statistics showing high central bank participation.

ECB figures released on Monday show the CBPP3 portfolio increased from Eu203.516bn to Eu203.731bn, in the week to last Friday. Portfolio redemption figures released yesterday (Tuesday) afternoon show that no CBPP3 holdings matured last week.

APP purchases were suspended from 22 December to 1 January, meaning that Friday’s figure only reflected buying on three days (assuming primary market purchases before 22 December settled this year), rather than the usual five, while activity was thinner on Monday, 2 January, due to a UK public holiday. None of last week’s new issues had settled by Friday, implying that secondary market purchases averaged around Eu72m across the three days.

Analysts said that the low pace of secondary buying could reflect central banks being focused on the primary market: last week some Eu10bn of CBPP3-eligible issuance was sold. All eight benchmark deals launched will settle this week, and analysts therefore expect next Monday’s figure to show a substantial increase in the pace of purchases.

Michael Spies, covered bond and SSA strategist at Citi, said that central bank participation in euro benchmarks has been at record levels so far this year, averaging 36% and, in CBPP3-eligible benchmarks, reaching as much as 55%.

“The primary market seemed to have been strongly supported by central banks and official institutions so far,” he said. “Although we cannot assess the purchase share of the ECB via its covered bond purchase programme in the new deals, we note that the share of central banks and official institutions reached a new record high on an aggregated basis during the first two weeks and that the share of this investor group was strongest in CBPP3-eligible covered bonds from euro area banks.”