CBPP3 portfolio reverses, but still set to regain QE share
The CBPP3 portfolio shrank last week, for the first time in a month, while gross purchases were less than half of the previous week’s amid a summer slowdown. Nevertheless, CBPP3’s contribution to monthly QE buying is set to recover.
ECB figures released yesterday (Monday) show the CBPP3 portfolio decreased EUR217m in the week to last Friday, from EUR256.322bn to EUR256.105bn. Figures released today (Tuesday) show that around EUR800m of CBPP3 holdings matured last week, implying gross purchases of around EUR583m.
This is down from a net increase of EUR1.253bn and gross purchases of around EUR1.353bn in the previous week. Weekly gross purchases have averaged EUR1.024bn year-to-date.
Last week was the first time since the week commencing 18 June that the CBPP3 portfolio has decreased, with redemptions in the portfolio having been more limited in recent weeks.
Analysts attributed the slump in gross purchases to the onset of the summer slowdown in the primary market and lower liquidity. This had an impact on the ECB’s other purchase programmes, they added, with total net asset purchase programme (APP) settlements falling from EUR11.21bn to EUR6.862bnn last week.
Maureen Schuller, head of financials research at ING, noted that in spite of last week’s fall in holdings, CBPP3’s contribution to net APP purchases is set to be notably larger this month than in June, when its share fell to a record low.
“On a month-to-date basis, CBPP3 represents 7.3% of the total EUR22.9bn bought this month,” she said. “This is up from 2.2% in June and 6.5% in May.
“The public sector purchase programme (PSPP) is responsible for 80% of the month-to-date net asset purchases, while the share of the corporate sector purchase programme (CSPP) is at a year-to-date monthly low of 10.4%.”
Net CBPP3 settlements in June totalled EUR683m and the programme’s share of net APP settlements fell to 2.2% on the back of the highest CBPP3 redemptions of any month this year, EUR3.202bn. Redemptions in the CBPP3 portfolio are lower this month, at EUR1.617bn, with this week’s redemptions being roughly half of that.