CBPP3 settlements registered last week suggest a clear majority of the Eurosystem’s gross covered bond purchases were on the secondary market for a second week running amid limited new issuance, in a significant rebound from record low secondary settlements in April.

Last month the Eurosystem’s gross secondary CBPP3 purchases fell to EUR1.2bn, their lowest since the programme was launched, with the focus on an especially active primary market. However, new issuance has been much more limited in May, with only three euro benchmarks – all CBBP3-eligible – issued so far.

ECB figures released on Monday show the CBPP3 portfolio increased EUR687m, from EUR252.583bn to EUR253.270bn, in the week to last Friday. Figures released yesterday (Tuesday) afternoon show no CBPP3 holdings matured last week.

Gross purchases were therefore up from EUR562m in the previous week, but below the 2018 average of EUR1.085bn.

Two CBPP3-eligible benchmark deals settled last week, a EUR500m seven year for Caja Rural de Navarra and a EUR500m 15 year for Raiffeisen-Landesbank Steiermark. Central banks and official institutions were allocated 21% and 31% of the deals, respectively. Analysts estimated that the Eurosystem’s share of the two deals amounted to around EUR150m-EUR200m.

This implies secondary market purchases averaged around EUR122m-EUR134m per day, their highest level since the first week of April, up from around EUR90m per day in the previous week. Last week’s figure relates to only four days of settlements, due to public holidays.

“This fits the picture that the Eurosystem has shifted its focus back on the secondary market, now that activity has slowed down in the primary market,” said Joost Beaumont, senior fixed income strategist at ABN Amro. “It also underpins the flexibility that the central bank has regarding CBPP3.”