The ECB registered gross covered bond purchases of around Eu1.105bn last week during an announced frontloading of QE purchases, but the CBPP3 portfolio increased just Eu105m as hefty redemptions were a drag on net growth.

According to ECB figures released on Monday, settled and outstanding purchases under the third covered bond purchase programme grew Eu105m, from Eu240.223bn to Eu240.328bn in the week to last Friday. Figures released yesterday (Tuesday) show that around Eu1bn of holdings matured last week.

Gross purchases were therefore up from Eu1.059bn in the previous week, and roughly in line with the 2017 average of Eu1.117bn per week. However, the week-on-week net increase is the lowest since the week commencing 17 June, when the portfolio grew Eu69m.

All of last week’s purchases were made on the secondary market, as no CBPP3-eligible issuance settled last week. Secondary market purchases therefore averaged some Eu221bn per day, up from around Eu200m per day in the previous week.

ECB figures show that Eu1.527bn of CBPP3 holdings will mature in December, the fourth highest monthly redemptions in the next 12 months. Analysts suggest the weight of redemptions means the ECB will struggle to maintain the rate of CBPP3 portfolio growth in December, even though APP purchases will be “somewhat frontloaded” at the start of the month, according to the ECB.

The ECB will temporarily pause APP purchases on Thursday of next week (21 December), in anticipation of lower liquidity and to reduce possible market distortions. Purchases will resume on 2 January, and the first publication of APP holdings in 2018 will be on 3 January.

This month will be the the last in which the ECB targets Eu60bn of purchases under the asset purchase programme (APP), with the target to be lowered to Eu30bn per month from January to the end of September 2018, at the earliest.