CBPP3 registered a substantial increase in purchases last week, with the Eurosystem buying Eu1.605bn of covered bonds while a hefty amount of its holdings matured. Analysts expect gross purchases to total around Eu5bn this month, though net portfolio growth is set to be notably lower.

European Central Bank figures released on Monday show that in the week to last Friday, the CBPP3 portfolio increased Eu505m, from Eu214.672bn to Eu215.177bn. Portfolio redemption figures released yesterday (Tuesday) afternoon show that around Eu1.1bn of CBPP3 holdings matured last week – the joint largest redemptions yet recorded in the portfolio, matching CBPP3 redemptions in the week ending 20 January.

Gross purchases therefore totalled around Eu1.605bn, up from around Eu1.079bn in the previous week.

Eu2.75bn of CBPP3-eligible benchmark supply settled in the respective period, of which analysts estimated the Eurosystem was allocated Eu600m-Eu800m. This would imply that secondary market purchases averaged Eu160m-Eu200m per day, up from the estimated daily average of around Eu110m-Eu115m per day last week.

Analysts estimated that the Eurosystem is on track for gross covered bond purchases of around Eu5bn this month, close to the Eu5.53bn bought in February. They noted, however, that net portfolio growth will be substantially lower owing to the substantial redemptions and to a quarter-end amortisation adjustment.

“We therefore expect the full-month net purchases to stay more or less at the current level of Eu2.1bn,” said one. “This would be the second-lowest monthly figure since the start of the programme in October 2014.”

In total, Eu1.9bn of the ECB’s holdings from its three covered bond purchase programme matured last week, the highest amount since the week of 20 January, when Eu2.1bn was repaid.