The CBPP3 portfolio shrank EUR495m last week, as EUR1.3bn of covered bond holdings matured, but gross buying of some EUR805m was the highest weekly total since the European Central Bank halved its monthly APP target from the beginning of the month.

Settled and outstanding purchases under CBPP3 fell from EUR260.923bn a week previously to EUR260.428bn as of Friday. Taking into account redemptions of around EUR1.3bn announced by the ECB yesterday (Tuesday) afternoon – which were higher than some analysts were expecting – this means gross buying was around EUR805m.

This is higher than any of the previous three weeks, when gross purchases ranged from EUR642m to EUR710m.

“So far, gross CBPP3 purchases have amounted to EUR2.8bn in October, and adding the purchases of the last three trading days of the month, it is likely that gross covered bond purchases will total more than EUR3bn this month,” said Joost Beaumont, senior fixed income strategist at ABN Amro. “This would be down from the average of EUR3.8bn that the Eurosystem bought so far per month this year, albeit only marginally.

“This illustrates that the central bank will remain a significant player in the market.”

Analysts variously suggested that EUR200m-EUR275m of the week’s Eurosystem purchases were in the primary market, but either imply that secondary market purchases averaged more than EUR100m per day and potentially as much as EUR121m –close to the pace the previous week, which was the highest since June.