The announcement of plans to subject Scottish authorities bonds is a “very proud day for Scotland”, First Minister John Swinney has mentioned.
The SNP chief confirmed bonds must be issued in 2026-27 in a bid to draw funding for “key infrastructure” tasks – although that is topic to the end result of Might’s Scottish parliament election in addition to different components.
It comes after two international credit standing businesses awarded Scotland the identical rating because the UK.
Moody’s rated the Scottish authorities as Aa3, whereas S&P International rated it as AA, each equivalent to the UK’s sovereign ranking and better than nations resembling Spain, Italy and Japan.
Mr Swinney mentioned: “This can be a very proud day for Scotland, as a result of we have achieved the very best credit score scores we might inside the UK from two of the world’s main credit standing businesses, Moody’s and Commonplace and Poor’s.
“That’s a reflection of the economic strength of Scotland, the strength of our financial management, and the strength of the financial institutions within Scotland, and it gives us a really strong foundation for the issuing of a bond up to a value of £1.5bn in the next parliamentary term, over a number of years, which can underpin investment in the capital programme of Scotland.”
The bond issuance – which might permit traders to purchase Scottish authorities debt – would supply “another option” for the nation to draw funding, Mr Swinney mentioned.
Whereas he mentioned housing and the drive to web zero may benefit from the bonds, he wouldn’t go additional on particular programmes which might be financed.
Mr Swinney added: “The federal government will set out within the funding programme in January precisely the tasks that we’re taking ahead over the course of the following few years.
“But obviously we need to have the funds to underpin that programme and what the announcement overnight from the credit rating agencies demonstrates is that Scotland has every potential to attract investment on international financial markets and that we can use those resources to support our capital programme.”
The Moody’s report, nevertheless, included independence as a potential issue that might see the nation’s credit standing downgraded.
The report mentioned: “Although not our baseline scenario, Scottish independence could exert downward pressure on the rating by introducing heightened uncertainty about the institutional framework and potentially raising financial stability risks.”
Mr Swinney mentioned “specific issuance plans will be subject to market conditions closer to the time”.
He added the Scottish authorities would “shortly commence engagement with banks to act as joint lead managers to enable the next Scottish government to proceed without delay” on the proposed Scottish bond scheme, which has been nicknamed “kilts” in a play on the UK equal of gilts.
In 2023, then first minister Humza Yousaf commissioned preliminary work with the objective of issuing bonds earlier than the top of the present Scottish parliament session.
That got here after advisers within the Scottish authorities’s investor panel beneficial making bonds obtainable to the market as a way of elevating Scotland’s profile and attracting funding.
Angus Macpherson, chairman of economic advisory agency Noble & Co and former co-chair of the investor panel, mentioned he was “greatly encouraged by the progress the Scottish government is making in achieving a credit rating to raise Scotland’s profile in the international capital markets”.
He added: “This is a positive step forward and demonstrates they are serious about becoming a more investor friendly destination.”
