Scotland ‘on track’ to issue first bonds in 2026-27, says Swinney

The Scottish Government is “on track” to issue its first ever bonds next financial year, with John Swinney saying the move will fund “key infrastructure” projects.

The First Minister confirmed bonds should be issued in 2026-27 – though this is subject to the outcome of May’s Holyrood election as well as other factors.

It comes after two global credit rating agencies awarded Scotland the same ranking as the UK. Moody’s rated the Scottish Government as Aa3 while S&P Global rated it as AA, both identical to the UK’s sovereign rating.

Speaking about the ratings, Holyrood’s Finance Secretary Shona Robison said: “This will very much persuade investors that Scotland is a safe bet.”

Mr Swinney meanwhile said the “high credit ratings” for the Scottish Government came as a result of its “track record of responsible fiscal management and pro-business environment”.

He confirmed Scotland is “now on track to commence the bond programme from 2026-27, with the proceeds used to fund capital investment in key infrastructure”.

The First Minister insisted: “This is about using the powers we have to borrow better – not more – and reflects the maturity of Scotland’s public finances after more than 25 years of devolution.

“It is the latest step in building the institutions and tools Scotland needs for a prosperous future where our country takes responsibility for its own decisions.”

The Moody’s report however included independence as a possible factor which could see Scotland’s credit rating downgraded.

The report said: “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 stressed “specific issuance plans will be subject to market conditions closer to the time”.

He said the Scottish Government 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 equivalent of gilts.

Ministers in Edinburgh say being able to issue bonds will allow further funding of infrastructure investment – with Scotland’s rating higher than countries such as Spain, Italy and Japan.

Then first minister Humza Yousaf in 2023 commissioned initial work with the goal of issuing bonds before the end of the current Scottish Parliament session.

That came after advisers in the Scottish Government’s investor panel recommended making bonds available to the market as a means of raising Scotland’s profile and attracting investment.

Angus Macpherson, chairman of financial advisory firm Noble and Co and former co-chair of the investor panel, said 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”.

Mr Macpherson added: This is a positive step forward and demonstrates they are serious about becoming a more investor friendly destination.”

Ms Robison said the credit ratings would be “absolutely fundamental to increasing investor engagement in Scotland”.

She also insisted the “firm foundations” of Scotland’s economy would be in place “in whatever constitutional arrangements we have in the future”.

Speaking on BBC Radio Scotland, she added: “Any transition to Scotland becoming an independent country would be carefully managed to uphold that investor confidence, protecting Scotland’s public finances and to support long-term economic prosperity.”