The ECB last week registered the highest weekly rate of covered bond purchases in over a year, with gross CBPP3 buying exceeding EUR3bn in a week of heavy supply, as the programme’s share in net APP settlements reached its highest level since the launch of PSPP in 2015.

According to figures released on Monday, settled and outstanding purchases under the third covered bond purchase programme increased EUR2.463bn in the week to last Friday, from EUR242.389bn to EUR244.852bn. Figures released yesterday (Tuesday) show that around EUR600m of CBPP3 holdings matured last week, implying that gross purchases totalled around EUR3.063bn.

These are the highest gross purchases in a single week since the week commencing 8 January 2017, when gross purchases amounted to some EUR3.785bn. The figure represents a substantial increase on the EUR2.006bn gross purchases in the previous week and is well above the 2017 average of EUR1.1bn per week.

The share of net CBPP3 settlements in the week-on-week growth of the asset purchase programme (APP) portfolio reached 32.5%, its highest level since the public sector purchase programme (PSPP) began in March 2015, according to Florian Eichert, head of covered bond and SSA research at Crédit Agricole.

Another analyst noted that in 2017 the CBPP3 share of net APP settlements averaged just 5%.

“While high covered bond primary market issuance in January and high volatility due to redemptions makes interpreting QE volumes more challenging, the ECB seems clearly willing to buy a higher share of covered bonds than in 2017,” he said.

Just EUR3.845bn of net PSPP settlements were registered last week, down from EUR7.109bn in the previous week, and the programme’s share of net APP settlements fell to its lowest ever level.

Market participants had widely expected the majority of the EUR30bn reduction in the ECB’s overall QE programme, which took effect from 1 January, to be carried out through PSPP.

“This is in line with our view that the Eurosystem will keep covered bond purchases roughly unchanged, with the EUR30bn reduction in total purchases mainly being focussed on the PSPP,” said Joost Beaumont, senior fixed income strategist at ABN Amro.

Eleven CBBP3-eligible benchmark deals settled last week, amounting to EUR8.875bn of supply, of which analysts estimate the Eurosystem bought around EUR3bn This would imply that secondary market purchases were negligible, averaging around EUR12m per day, down from EUR80m-EUR100m per day in the previous week and well below the 2017 average of around EUR140m per day.