Scottish government aiming to issue first bonds in 2026-27

According to the first minister, the Scottish government is on track to issue its first-ever bonds in the upcoming financial year. In 2026-27, John Swinney said bonds should be issued in 2026–27, but that is subject to the results of May's Holyrood election as well as other factors. The announcement came as the Scottish government was given the same status as the UK by two international credit rating agencies. To raise funds for infrastructure projects, the government intends to issue bonds, which will encourage it to borrow funds from investors who in return receive regular interest payments.

The Scottish government was rated AA3 by credit rating firm Moody's, while rival S&P Global rated it as AA, which is similar to the UK's sovereign rating. Moody's rating was based on the Scottish government's prudent fiscal control and the country's economic stability, according to Moody. Scotland's economy was strong, according to S&P, with the country operating

within a stable and predictable political framework that provides strong control and well-defined deals with the UK central government.

Both companies warned that if Scotland moves toward independence, their ratings could be reduced.

According to Swinney, the Scottish government's

track record of responsible fiscal control and pro-business environment

had led to the high credit ratings. Scotland isnow on target to begin the bond program from 2026-27,

he said, with the funds used to finance capital investment in critical infrastructure.

This is about using the powers we must borrow better, not more,

he said, and it reflects Scotland's public budget's mature after more than 25 years of devolution.

It is the most recent development in Scotland's institutions and equipment for a prosperous future, where our country takes responsibility for its own decisions.

Sinney said that the bonds would be issued as a result of market conditions closer to the date. According to him, the Scottish government will

shortly begin collaboration with banks to serve as joint lead managers

and allow the next Scottish government to proceed without delay

under the new plan.

What are government bonds?

When a government needs to borrow money from investors, it offers them a bond, which is a loan that the government promises to pay back at the end of an agreed period, whether it's five, ten, or 30 years. The government will continue to make regular payments to the investor, which may occur once every three months, six months, or year. A gilt is a government bond in the United Kingdom. The Scottish bonds have been described as kilts in this case, a play on this term. The Scottish government has had the authority to issue bonds since 2016, but it has previously borrowed funds from the UK National Loan Fund, which is the UK government's main account for managing borrowing and lending. There were stricter limits on how much money could be raised by bonds before recently. According to some reports by the Scottish government, bonds could be more valuable under certain conditions as well as greater flexibility. First Minister Humza Yousaf commissioned initial studies in 2023 with the intention of issuing bonds before the current Scottish Parliament session's session ended. That came as advisers in the Scottish government's Investment Committee recommended that bonds be sold to the public as a way of raising Scotland's profile and attracting investment.

What difference would independence make to credit ratings?

If Scotland wishes to become independent, having a system for issuing bonds that is already in place rather than having to build one up from scratch would be helpful. The Moody's study, on the other hand, included freedom as a potential factor that could have Scotland's credit rating downgraded.

Although not our baseline scenario, Scottish independence could place downward pressure on the rating by introducing more uncertainty about the institutional framework and potentially raising financial stability risks.

Scotland's high rating is a direct result of our membership in the UK and the financial stability that comes,

Scottish Conservative finance spokesman Craig Hoy said.

Despite the SNP's desperate attempts to spin it otherwise, the ratings agencies highlight the benefits of being a member of the Union.

Both S&P and Moody's ratings will be downgraded if there were any attempts to break up the UK.

We know that John Swinney will never stop preaching his independence obsession, but the ratings agencies acknowledge how damaging it will be for our economy.

Why is the credit rating important?

The credit rating assigned by companies such as Moody's or S&P boosts investor confidence and helps determine the interest rate that the government will have to pay on the loan. Under an agreement signed with the UK government in 2023, the Scottish government is allowed to borrow up to £472 million for capital improvement over the next year. This would bring the total capital borrowing of the company to around £2. 7 billion - close to its legal maximum of £3. 1bn. It is not limited to governments that can raise money through bonds, not just governments. After issuing stock market bonds worth £370 million in 2016, Aberdeen City Council became Scotland's first local authority to raise funds by the capital markets.