Moody's slashes debt ratings for UK building societies
The UK building society sector was today shaken by a substantial downgrading of debt across the board. A number of well-known UK building societies have seen their debt ratings slashed to junk bond status after a review by the credit ratings agency Moody's. While there have been issues with some building societies in the UK the reduction of some ratings to near junk bond status is a major blow.
The Chelsea building society, which has around 500,000 savers and 90,000 mortgage holders, saw its own debt side from C to E+ while the West Bromwich saw a slide from C- to E+. Even such giants as the Nationwide did not escape the red pen of Moody's with a reduction from B to C-. Not only does this increase finance costs for these operations but it has also caused a number of investors to think about the safety of their funds.
The Building Societies Association has come out in support of the sector as a whole with a suggestion that the review of the sector by Moody's is "over pessimistic". This is just one sign that the UK recession, while showing signs of bottoming out, could turn again if any unforeseen circumstances occur.
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