A Danish bill on conditional mortgage bond maturity extensions will help reduce liquidity risk, but does not on its own reduce refinancing risk in the country’s mortgage system, said Fitch, urging the industry to continue its efforts to tackle this risk by other means.

A bill providing for the conditional maturity extension on certain Danish covered bonds removes refinancing risk for covered bond issuers and will have a “marked” credit positive impact on Nordea Kredit covered bonds, said Moody’s on Monday.

The Danish government and several opposition parties last Thursday (6 February) agreed on legislation aimed at reducing refinancing risk in the country’s mortgage system, after the central bank said S&P had made a positive statement about the bill.

The Danish parliament will tomorrow (Friday) discuss government legislation on conditional forced maturity extensions in mortgage bonds for the first time, with the final draft softer than the initial proposal in a bid to address investor concerns.