The Scottish government plans to issue its first bonds in the financial year 2026-27, as announced by First Minister John Swinney. The timing of the bond issuance is contingent on the results of May’s Holyrood election and other influencing factors. Swinney emphasized that the bonds would be utilized to raise funds for infrastructure projects, enabling the government to attract investments by offering regular interest payments to bondholders.
Recently, the Scottish government received credit ratings comparable to those of the UK from two global agencies: Moody’s rated it as Aa3, while S&P Global assigned an AA rating. These ratings reflect the agencies’ assessments of Scotland’s fiscal management and economic stability. However, both agencies cautioned that these ratings might be downgraded if Scotland pursued independence.
Swinney attributed the favorable credit ratings to the government’s responsible fiscal management practices. He indicated that issuing bonds marks a step toward enhancing Scotland’s financial autonomy, saying it reflects the maturity of its public finances after over 25 years of devolution. Additionally, he noted that details regarding the bonds’ issuance would depend on market conditions at the time.
The credit rating is crucial as it influences investor confidence and the interest rates Scotland would face when borrowing. The Scottish government is currently authorized to borrow up to £472 million for capital investments over the next year, bringing its total capital borrowing to about £2.7 billion, close to its legal limit of £3.1 billion.
While this development may strengthen Scotland’s ability to raise funds, it raises questions about how potential moves toward independence might impact the sustainability of these ratings and subsequent borrowing capabilities.
Source: https://www.bbc.com/news/articles/cj97dw17k3do?at_medium=RSS&at_campaign=rss