Gross CBPP3 purchases reached their highest level since September last week on the back of an increase in eligible supply settlements, but redemptions reached their equal-highest level, meaning the portfolio ultimately contracted some €1.120bn, one of its largest falls.

According to data released by the European Central Bank on Monday relating to settled and outstanding purchases under its various programmes, the CBPP3 portfolio decreased €1.120bn in the week to last Friday, from €288.528bn to €287.408bn.

The €1.120bn contraction is on the back of around €2.8bn of CBPP3 redemptions last week – the equal highest under the programme alongside the weeks ending 27 November and 30 October last year.

Gross purchases last week were therefore €1.680bn – their highest weekly amount since the week ending 25 September. The high coincides with an increase in the volume of CBPP3-eligible supply settling during the week, which, at €3.25bn, was also at its greatest since the same September week.

“The rather high maturities of €2.8bn in the CBPP3 portfolio could not be offset despite the brisk buying activity (hence the falling portfolio balance),” said DZ analyst Verena Kaiser. “The fact that the settlement dates for some CBPP3 eligible new issues fell into last week most certainly helped the ECB.”

Joost Beaumont, senior fixed income strategist, ABN Amro, estimates the Eurosystem purchased around €600m in the primary market last week, meaning average daily purchases in the secondary market were around €200m.

“As such,” he said, “the central bank remains a key player in the market, which is unlikely to change for the time being.”

CBPP3-eligible benchmark issuance totalling €2.5bn is due to settle this week – comprising a €2bn BPCE SFH two-tranche deal and a €500m Berlin Hyp issue, of which central banks and official institutions were allocated 30.5% and 27%, respectively – while a €250m 10 year Landesbank Berlin sub-benchmark also settles.

At least €1.75bn of eligible supply is due to settle next week, including a DZ Hyp €1bn long nine year deal and a Société Générale SFH €750m 10 year, both launched on Monday.