The ratings agency says the outlook across all ratings is negative, delivering a blow to investor confidence in B&B assets.
Moody’s says its assessment of expected losses indicate the buy-to-let lender is weakly capitalised, and reveals an “increasingly vulnerable dependence on ongoing access to BoE funding.”
Another area of concern for Moody’s is that 85% of B&B’s loan book is focussed in buy-to-let and self-cert. The ratings agency says the quality of the loans within these sectors has deteriorated much more quickly than similar asset classes held with rival lenders.
Total arrears for the lender, including the bank’s own originated loans, went from 2.10% to 3.1% during the first six months of 2008. This performance is the highest of any rated peer in the UK.
The move to downgrade B&B follows the earlier downgrading of assets by Standard and Poor’s in July.
Marjan Riggi, vice-president and senior credit officer at Moody’s, says: “A key driver for this rating action has been our heightened concern on asset quality since the ratings review was initiated in early July.”
A statement released by Moody’s reads: “Moody’s believes that in the current environment any further capital raising by B&B to offset such losses may be very challenging, when taking into account the difficulties it faced when raising the £400m in July.”
B&B shares are currently trading at 29.75 pence per share, following yesterday’s high of 37.75 pence and having closed at 32 pence per share.