Gross CBPP3 purchases fell to just under Eu3bn in August as the summer slowdown took hold, displacing July as the second quietest month for the programme, even as the Eurosystem bought a higher share of eligible supply than in any month for almost two years.

ECB figures released on Monday show the CBPP3 portfolio increased Eu2.686bn, from Eu225.103bn to Eu227.788bn, in August. Taking redemptions of around Eu300m into account, gross purchases amounted to around Eu2.986bn.

Net purchases therefore increased slightly last month versus July, when the portfolio grew Eu2.472bn. However, as redemptions were higher in July, gross purchases were markedly lower last month, down from Eu3.372bn. December 2016 is the only month in which gross CBPP3 purchases were lower than August, at around Eu1.682bn.

The low purchase volumes were attributed to low issuance and limited secondary buying, with the primary market undersupplied and the secondary market relatively illiquid during the summer period.

Just Eu2bn of CBPP3-eligible supply settled in August – comprising three Pfandbriefe, for MünchenerHyp, Commerzbank and WL Bank – of which the Eurosystem was estimated to have purchased around Eu740m.

Sverre Holbek, senior analyst at Danske Bank, said that, at around 37%, the CBPP3 allocation of eligible supply was in August the highest of any month since September 2015. The programme average, according to Holbek, is 30%.

“However, in our view, this merely reflects the relatively limited bid-to-cover of around 1.3 for all three deals, due to the tight pricing,” he said.

Net purchases across the whole asset purchase programme (APP) fell to Eu50.004bn last month, well short of the ECB’s monthly target of Eu60bn and reflecting the summer slowdown.

“For September, total QE purchases should be back at the usual pace of Eu60bn,” said Holbek. “We also expect CBPP3 purchases to pick up due to the rise in supply – eligible supply in September amounts to Eu3bn, excluding today’s deal from CM-CIC SFH.”

Figures released on Monday show that in the week to last Friday the CBPP3 portfolio grew Eu312m, from Eu227.711bn to Eu228.023bn. Portfolio redemption figures released yesterday (Tuesday) afternoon show that some Eu300m of CBPP3 holdings matured last week, implying gross purchases of around Eu612m.

This is down from gross and net buying of Eu1.141bn in the previous week and well below the average weekly gross purchases this year of some Eu1.11bn.

One CBPP3-eligible deal settled last week, a Eu500m Pfandbrief for WL Bank, of which analysts estimate the Eurosystem bought around Eu200m. This implies gross secondary purchases averaged around Eu82m per day last week, down from around Eu96m-Eu108m per day in the previous week.

The ECB will tomorrow (Thursday) hold a meeting of its governing council. Market participants will be watching ECB president Mario Draghi’s subsequent press conference closely for any announcement or signalling of a tapering of the Eurosystem’s asset purchases, although expectations of this are now lower than they were before the summer.