The Covered Bond Report

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Gross CBPP3 buying steady, net eases on bump in redemptions

Gross CBPP3 purchases totalled around €1.093bn in the latest ECB figures, not far off the recent average, although redemptions kept the net increase down to its lowest level since the last week of April.

According to figures released by the European Central Bank on Monday, settled and outstanding purchases under CBPP3 as of Friday stood at €282.993bn, up €293m on the week. This is the lowest number since the week-ending 1 May, when the portfolio shrank €231m. Around €0.8bn of the portfolio redeemed last week, the highest amount since the week-ending 24 April when redemptions totalled €1bn.

Gross purchases of €1.093bn compare with an average of €1.314bn for the year and an average of €1.121bn for the previous five weeks. With the exception of last week – which had the highest volume of eligible settlements in seven weeks and was €1.419bn – gross purchases have since the first week of May remained within a corridor of around €100m, ranging from €1.024bn to €1.103bn.

€750m of eligible new issuance settled last week, an Axa Bank Europe SCF €500m 20 year and an LHV Pank €250m five year. 13%, or €65m, of Axa’s issue was placed with central banks and official institutions, while they were allocated 41%, or €102.5m, of LHV’s issue, although €37m of the deal was to the European Bank for Reconstruction & Development (EBRD) and the percentages do not necessarily reflect Eurosystem buying. Crédit Agricole analysts estimate the Eurosystem bought €39m of the eligible primary market supply.

Eurosystem gross purchases across APP and PEPP for last week came in at €41.800bn, and net purchases at €36.100bn, down from €38.917bn the previous week and versus a €34.310bn average since PEPP’s launch.