Danish mortgage bill does not fully eliminate refinancing risks -S&P

COPENHAGEN Wed Feb 5, 2014 1:53am EST

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COPENHAGEN Feb 5 (Reuters) - The Danish government's proposal to extend maturities for adjustable-rate bonds if auctions fail does not fully eradicate refinancing risks for the mortgage banks issuing the bonds, credit rating agency Standard & Poor's (S&P) said.

The proposed changes alleviated S&P's immediate concerns about the mortgage banks' refinancing risk, the agency said in a note mailed to Reuters. "But they fall short of neutralizing the risk from the banks' heavy reliance on short-term funding," it added.

S&P's opinion is important because the bill has been crafted to, among other things, ease the credit rating agencies' concerns about the Danish mortgage banks' large annual refinancing auctions, which the agencies say put the mortgage banks at risk should international debt markets freeze up. (Reporting by Teis Jensen; Editing by Andrew Heavens)

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