CBPP3 purchases registered a slight increase last week, with the Eurosystem buying Eu1.079bn of covered bonds. However, its secondary market purchases have continued a recent slide, according to analysts, who speculated the ECB is having to rely more on the primary market.

European Central Bank figures released on Monday show that in the week to last Friday, the CBPP3 portfolio increased Eu879m, from Eu213.793bn to Eu214.672bn. Portfolio redemption figures released yesterday (Tuesday) afternoon show that around Eu200m of CBPP3 holdings matured last week, implying gross purchases of around Eu1.079bn. This compares with gross purchases of around Eu856m in the previous week.

Last week, Eu2bn of CBPP3-eligible benchmark supply settled, of which analysts estimated that the Eurosystem bought Eu500m-Eu530m. This would imply that secondary market purchases averaged Eu110m-Eu115m per day, down from the estimated daily average of around Eu140m-Eu150m last week and around Eu170m in the week before that.

“This signals that it is becoming more difficult for the central bank to source CBPP3 from the secondary market, implying that it needs to rely more on the primary market,” said Joost Beaumont, senior fixed income strategist at ABN Amro. “Happily for the Eurosystem, there will be quite some settlements in the primary market, which could keep secondary market purchases limited.”

This week, some Eu2.75bn of CBPP3-eligible issuance will settle, and analysts expect the pace of CBPP3 buying to increase as a result.