CBPP3 purchases last week registered their highest increase since September 2015 and fifth highest since the programme began, with the Eurosystem buying around Eu3.785bn, gross, of covered bonds, almost all of it in a primary market inundated with eligible issuance.

ECB figures released yesterday (Monday) show the CBPP3 portfolio increased Eu3.485bn, from Eu203.731bn to Eu207.216bn, in the week to last Friday. Portfolio redemption figures released this (Tuesday) afternoon show that around Eu300m of CBPP3 holdings matured last week, implying gross purchases of around Eu3.785bn.

This is the largest weekly increase since September 2015, when in the week commencing 7 September the Eurosystem purchased a gross Eu3.892bn after a surge in primary market purchases, with 10 CBPP3-eligible deals having settled in the previous week.

Only on three other occasions has weekly CBPP3 portfolio growth been higher than last week, in the earlier days of the programme in November 2014, December 2014 and January 2015, all before the Eurosystem’s overall QE programme was expanded by the launch of the public sector purchase programme (PSPP) in March 2015.

The magnitude of last week’s portfolio growth was attributed to the abundant supply on offer in the first trading days of the year, with some Eu10bn of CBPP3-eligible issuance having settled last week, across eight benchmark deals.

Florian Eichert, head of covered bond and SSA research at Crédit Agricole, estimates the Eurosystem bought around Eu3.7bn of this supply, which would imply that gross secondary market purchases averaged around just Eu17m per day – one of the lowest ever weekly secondary purchase rates.