Gross CBPP3 purchases were last week at their lowest level since April, with no euro benchmarks settling and secondary activity easing. The overall APP portfolio shrank on the back of high redemptions, dragging aggregate gross purchases down to their second lowest amount since PEPP’s launch.

Settled and outstanding purchases under the European Central Bank’s third covered bond purchase programme (CBPP3) increased €275m, as the portfolio grew from €284.944bn to €285.219bn in the week to last Friday. Redemptions amounted to some €0.5bn last week, meaning gross purchases were €775m, down €414m from €1.189bn the previous week.

This is the lowest weekly gross purchases since the week ending 1 May and €372m below the €1.146bn weekly average from the time PEPP was launched in March until the week before last.

A seasonal lull in primary market activity meant that last week no CBPP3-eligible supply settled for the first time in nine weeks.

“The lower buying activity seems a reflection of the slower summer months,” said analysts at ING.

The APP portfolio contracted €1.582bn last week, with gross purchases of around €11.818bn and redemptions of around €13.4bn. The redemptions figure is the highest since the week ending 17 April, with €12.4bn of public sector purchase programme (PSPP) assets maturing last week.

PEPP grew €20.573bn, €3.067bn more than €17.506bn the previous week when the programme recorded €2.5bn of redemptions – the most yet – versus €0.5bn last week.

Gross purchases were €21.073bn, up around €1bn from the previous week, but for the third consecutive week below the weekly average, which until the week before last was €25.972bn. Aggregate gross purchases of €32.891bn for the week are the second lowest under APP and PEPP, behind €31.694bn in the week ending 1 May.

“That the ECB slows down purchases over summer is not unusual,” said ING’s analysts, “especially with markets on the mend.”

Photo: Martin Lamberts/ECB