THE buy-to-let mortgage specialist Bradford & Bingley has had a key credit-rating cut by Moody’s, amid a sharp jump in the number of customers falling behind with repayments.

B&B’s “bank financial strength rating” (BFSR) has been cut by the agency from C+ to C, with warnings of further downgrades to come.

The ratings agency describes the BFSR as “a measure of the likelihood that a bank will require assistance from third parties such as its owners, its industry group or official institutions”.

If the rating were cut one more notch, the Moody’s definitions suggest the bank could potentially require support from the Bank of England.

Separately, regulatory filings made by B&B’s wholesale funding vehicles late last week indicated that the bank has seen customer arrears jump by between 40% and 50% since December.

Analysts said the figures were still very low, at little more than 2% of the bank’s total book, but were surprised at the rate of increase.

B&B has said it was fully funded until the first quarter of 2009. Moody’s praised B&B for continuing to access funding through the tough market conditions, and for attracting an additional £1.3 billion of savers’ money in the first two months of the year. B&B declined to comment on the rating change.

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