CBPP3 registered a fall in buying of almost Eu1bn last week, as a reduction in primary market purchases upon more limited options came in parallel with a sharp slowdown in secondary buying, with the ECB’s Benoît Cœuré highlighting how January issuance helped the previous healthy pace.

European Central Bank figures released on Monday show the CBPP3 portfolio increased Eu278m, from Eu211.004bn to Eu211.282bn, in the week to last Friday. Portfolio redemption figures released yesterday (Tuesday) afternoon show that around Eu500m of CBPP3 holdings matured last week, implying gross purchases of around Eu778m – down from around Eu1.74bn in the previous week.

One CBPP3-eligible deal settled last week, a Eu500m issue for Van Lanschot, of which 29% was allocated to central banks and official institutions. Analysts estimated that the Eurosystem’s share amounted to around Eu125m, implying that secondary market purchases averaged around Eu130m per day last week.

This represents a fall from an estimated Eu180m-Eu210m per day in the previous week and an estimated Eu250m-Eu265m per day – the highest secondary settlements since July – in the week ending 3 February.

“This is clearly less than the last two weeks,” said Florian Eichert, head of covered bond and SSA research at Crédit Agricole. “Active primary markets make it easier though to source bonds in secondary markets as well, hence the drop is only natural in our view.

Eichert suggested that the Eurosystem may have also stepped down CBPP3 purchases after volatility in rates, which had been led by turbulence in French government bonds, subsided.

Minutes of the 18-19 January monetary policy meeting of the ECB governing council released last Thursday highlighted the contribution the new-year surge in covered bond issuance made to the central bank’s QE.

“APP purchases had resumed smoothly in 2017,” said Benoît Cœuré, ECB executive board member, “with a particularly healthy pace for the third covered bond purchase programme, on the back of strong primary market activity.”