The CBPP3 portfolio increased €772m last week, in its biggest week of growth this month, as an increase in eligible primary market settlements coincided with a fall in redemptions, ending a three week spell of meagre net purchases and portfolio contractions.

According to data released by the European Central Bank relating to settled and outstanding purchases under its various programmes on Monday, the CBPP3 portfolio grew €722m in the week to last Friday, versus a €81m decrease the previous week. Redemptions were around €900m, down from €1.2bn and then €1.3bn over the previous two weeks.

Gross purchases were €1.622bn, up €403m from €1.219bn the previous week, and the highest weekly gross purchases since the week ending 25 September. This reflects a rise in the volume of CBBP3-eligible primary market supply settling, which, at €1.75bn, is greater than the previous three weeks combined.

“New issuance does not appear to be without effect on the volume of covered bond purchases by the European Central Bank,” said Thorsten Euler, analyst, DZ Bank.

CACIB analysts estimated the Eurosystem bought close to €300m of the eligible supply.

Some €2.5bn of eligible supply is due to settle this week. ING analysts said the increase in settlements, and some €3.5bn in eligible euro benchmark covered bonds falling due, mean that gross purchases can be expected to follow an upwards trajectory.

“We would not be surprised if this week’s buying tops the €2bn level,” they said.

In spite of last week’s rise in gross purchases, the CBPP3 portfolio has not increased over the past four weeks. From the week ending 25 September to the end of last week, the portfolio contracted €309m, from €287.735bn to €287.426bn, with an end of quarter €451m amortisation adjustment an additional impediment to growth.

Aggregate gross APP and PEPP purchases of €30.121bn were €1.332bn less than €31.453bn the previous week.