Third covered bond purchase programme (CBPP3) - Questions & answers

Last updated: 28 January 2019 (Q1.8)

Eligibility criteria


No maximum or minimum maturity has been defined for the programme.


No minimum issuance volume has been defined for the programme.

Q1.3 How is a covered bond purchased under the CBPP3 treated if it has two or more ratings? Which rating do you use?


Q1.4 The eligibility criteria for the CBPP3 foresee that only securities accepted for own use can be purchased.


In principle, all covered bonds that comply with the eligibility criteria established in Annex I to the Guideline (ECB/2011/14) as amended and that, in addition, fulfil the conditions laid out in the fifth paragraph of Section are eligible. From 1 May 2015, Guideline (ECB/2011/14) has been replaced by Guideline (ECB/2014/60) as amended. The rules for the own-use of covered bonds are now set out in Article 138 of that Guideline.

Concretely, this Article states that the Eurosystem exempts specific debt instruments from the “close links” rule. As such, covered bonds can be “own-used” as collateral by the issuer (or by a closely linked counterparty) if they are CRD/CRR-compliant. The actual or potential inclusion of government-guaranteed bank bonds in a pool of covered bonds pursuant to Article 139(1)(b) of Guideline (ECB/2014/60) does not affect the eligibility of such covered bonds for own-use.








Q1.8 Why are conditional pass-through covered bonds no longer eligible for purchase?

The Governing Council decided to exclude conditional pass-through covered bonds from purchases under the CBPP3, as of the end of the net purchase phase. The decision reflects their somewhat more complex structure, whereby some pre-defined events may lead to an extension of a bond’s maturity and to a switch in the payment structure.

The decision was taken within the context of the CBPP3 and has no consequences for the eligibility of conditional pass-through covered bonds in the Eurosystem collateral framework.

Retained bonds

Q2.1 Why would a bank sell retained covered bonds to the CBPP3 when they can be placed at the ECB for repo purposes?





Q3.1 Does the Eurosystem share income and losses generated by the CBPP3?


Q3.2 Does the Eurosystem apply any specialisation in purchases across jurisdictions and maturities?


Collateral eligibility

Q4.1 Under the CBPP3, the Eurosystem is able to buy up to 70% of a securities issue per international securities identification number. In the case of the remaining 30%, are these eligible for Eurosystem repo purposes, assuming they meet the covered bond requirement criteria?


CBPP3 securities lending

Q5.1 Why is securities lending of CBPP3 holdings not mandatory for the Eurosystem?

For cost efficiency and operational reasons, securities lending of holdings under CBPP3 is not mandatory for Eurosystem central banks. The establishment and maintenance of securities lending arrangements has a certain cost for the Eurosystem central banks. The total cost depends on a number of factors, such as the lending channel, the lending infrastructure, the number of securities available for lending, the type of collateral accepted and other technical and operational parameters. The overall Eurosystem cost increases if several central banks make the same security available for lending.

Covered bonds purchased under the CBPP3 are often held by several (i.e. more than two) Eurosystem central banks, which is due to the programme-specific allocation of the eligible universe to individual Eurosystem central banks. This is in contrast to the PSPP and CSPP allocation, where each security is held by one or at most two Eurosystem central banks. Moreover, the CBPP3 allocation often results in individual central banks having relatively small holdings, so that the benefit of setting up and maintaining securities lending facilities would not justify the cost. However, even though lending the CBPP3 holdings is not mandatory, the ECB and several other national central banks make their CBPP3 (as well as CBPP and CBPP2) bonds available for lending. Those Eurosystem central banks that do not make their holdings available for lending very rarely receive requests to borrow them. For them, the expected demand would not justify the cost of establishing securities lending facilities. Most importantly, holdings from each covered bond jurisdiction are made available for lending by at least one Eurosystem central bank.

Q5.2 Why does the Eurosystem not publish the ISIN lists of its CBPP3 holdings for securities lending purposes?

The Eurosystem publishes the ISIN lists only for those programmes (PSPP and CSPP) for which the Governing Council has decided to make securities lending mandatory. Thus the Eurosystem does not publish the ISIN lists for its CBPP3 holdings as securities lending is not mandatory for this programme. Counterparties that wish to borrow CBPP3 holdings can contact the ECB or any NCB that makes those bonds available for lending to enquire about the potentially availability of their holdings of particular ISINs.

Other questions

Q6.1 How are CBPP3 purchases conducted  during the reinvestment phase?

The Eurosystem aims to maintain the size of the CBPP3 cumulative net purchases at the level attained at the end of December 2018. During the reinvestment phase the Eurosystem continues to adhere to the principle of market neutrality via smooth and flexible implementation and as a result limited temporary deviations from this level may occur.

Market capitalisation continues to be the guiding principle for reinvestment purchases. Purchases of securities in primary markets continue to be permitted as necessary.

Data on the size of the CBPP3 holdings are published ex post on a weekly basis.



Q6.3 Where on the ECB’s website can I find a list of the Eurosystem’s current holdings of covered bonds?


Q6.4 Does the Eurosystem act as a “regular” investor when conducting purchases under the CBPP3?


Q6.5 Banks in some countries do not issue covered bonds and do not own asset-backed securities. How does the Eurosystem help those banks if they do not own securities that the Eurosystem is willing to purchase?







Finally, purchases take due account of market functioning.



Q6.8 Could the Eurosystem have preferred creditor status for the CBPP3?




The Eurosystem will normally aim to adopt a neutral approach towards consent solicitations thereby facilitating a market-based decision on the changes proposed. Furthermore, the Eurosystem is of the view that improvements could be made to two features of the consent solicitation process:


