CBPP3 last week grew at its slowest rate since the beginning of September in net and gross terms, with increases of Eu352m and Eu652m, respectively, but the low was not deemed reflective of any change in the ECB’s approach to covered bond buying.

According to figures released by the ECB on Monday, settled and outstanding purchases under the third covered bond purchase programme grew from Eu237.416m to Eu237.768bn in the week to last Friday. Figures released yesterday showed Eu300m of redemptions in the respective period.

These are the lowest gross and net increases since the week ending 1 September, when the gross increase was Eu612m and the net was Eu312m, according to figures from Crédit Agricole analysts.

Analysts suggested the low was a blip rather than reflecting any change in trend related to the ECB’s changes to QE announced on 26 October.

“The slowdown followed a week where the central had stepped up purchases, so it is likely that it should be largely related to weekly volatility,” said Joost Beaumont, senior fixed income strategist at ABN Amro. “Looking forward, we expect that the central bank will not change the volume of covered bond purchases materially, as we expect that the Eu30bn reduction in net purchases from January will be mainly focussed on government bonds and agency debt (i.e. the PSPP).

“The reason being that the central bank is reaching its limits regarding the PSPP, while covered bond purchases have already declined during the programme, limiting the room to reduce them further.”

Average daily secondary buying for the week was estimated by the Crédit Agricole analysts at almost Eu110m, around half the estimated Eu212m average for the previous week.