CBPP3 registered a jump in gross purchases last week after the Eurosystem bought some Eu2.1bn of covered bonds, with secondary buying seen hitting its highest level since last summer. ECB figures also confirmed that January was the programme’s busiest month since last March.

European Central Bank figures released on Monday show the CBPP3 portfolio increased Eu1.800bn, from Eu207.864bn to Eu209.664bn, in the week to last Friday. Portfolio redemption figures released yesterday (Tuesday) afternoon show that around Eu300m of CBPP3 holdings matured last week, implying gross purchases of around Eu2.1bn – up from around Eu1.3bn in the previous week.

These are the highest gross purchases registered in a single week since the week ending 25 November, when they also totalled around Eu2.1bn.

One CBPP3-eligible deal settled last week, a Eu2.5bn three tranche issue for Crédit Agricole, of which analysts estimated the Eurosystem bought Eu775m-Eu840m. This implies average secondary market purchases of Eu250m-Eu265m per day, up sharply from the previous week’s average of Eu91m-Eu111m. According to Crédit Agricole estimates, last week’s secondary settlements were the programme’s highest since the week ending 1 July 2016.

“This once more proves the point in our view that the CBPP3 is ready to pick up the pace in case there is selling pressure in the market while being perfectly happy to sit back in case there is no liquidity in the market,” said Florian Eichert, head of covered bond and SSA research at Crédit Agricole.

In January, the CBPP3 portfolio grew Eu4.733bn. However, given record high portfolio redemptions of at least Eu2.3bn (as of 27 January), gross purchases exceeded Eu7bn. As had been expected, this made January the programme’s busiest month since last March, when gross buying totalled around Eu7.7bn.

Analysts attributed the high figure to increased levels of CBPP3-eligible issuance, although they also estimated that Eu2.2bn-Eu2.6bn of last month’s total was purchased on the secondary market.

“Rather than not having purchased any covered bonds in secondary markets as the net settlements would indicate, the secondary gross buying of Eu2.3bn was quite significant after all,” said Eichert. “This holds especially true when factoring in the very active primary market.”