Gross CBPP3 purchases of €1.128bn reported by the ECB for last week were down moderately on the previous week, but the covered bond programme’s share of the week’s net APP increase was in line with January and its presence deemed a continued support to spreads.

European Central Bank figures show that in the week to last Friday (7 February), settled and outstanding CBPP3 purchases grew €1.128bn, from €267.29bn to €268.42bn. Gross purchases constituted the €1.128bn given that no CBPP3 holdings matured.

This increase in the portfolio compares with a reduction of €300m the week prior (week-ending 31 January), although this was due to a high volume of redemptions, some €1.8bn, meaning gross purchases were around €1.492bn, €364m higher than the latest week.

Last week €2.5bn of CBPP3-eligible benchmark supply settled and Joost Beaumont, senior fixed income strategist, ABN Amro, estimated the Eurosystem bought €350m. This would imply it bought around €156m a day in the secondary market, down from an estimated €190m the previous week and around €200m the week before that.

Beaumont said that although last week’s CBPP3 purchase share of APP, 18.1%, was some 5% greater than the average share seen since net purchases under the programme resumed in November 2019, it is nevertheless in line with ABN Amro’s view that in the long run the figure will fall somewhere between 10% and 15%.

“Needless to say,” he added, “the CBPP3 purchases are one of the key drivers keeping spreads compressed.”

This week some €3.5bn of CBPP3-eligible issuance settles.