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

Shiva K Dhakal
National Press Corporation(NPC)
United Kingdom-The Scottish government is preparing to issue its first-ever bonds in the 2026–27 financial year, First Minister John Swinney has confirmed, marking a milestone in Scotland’s fiscal autonomy.

Speaking after two major credit rating agencies, Moody’s and S&P Global, assigned the Scottish government the same sovereign ratings as the UK, Mr Swinney said the administration was now “on track” to begin the bond programme next year, subject to the outcome of the May Holyrood election and prevailing market conditions.

Under the plan, the government will issue “kilts” — Scotland’s equivalent of UK gilts — to borrow directly from investors and finance major infrastructure projects. Moody’s rated Scotland at Aa3 and S&P at AA, both reflecting the UK’s sovereign standing.

Moody’s cited Scotland’s “prudent fiscal management and economic stability”, while S&P described its economy as “strong”, operating within a “stable and predictable institutional framework” underpinned by UK oversight. Both warned that any renewed push for Scottish independence could trigger a credit downgrade.

Mr Swinney welcomed the assessments, saying the high ratings reflected Scotland’s “track record of responsible fiscal management and a pro-business environment”. He added:“This is about using the powers we have to borrow better — not more — and demonstrates the maturity of Scotland’s public finances after more than 25 years of devolution.”

The Scottish government will soon begin talks with banks to act as joint lead managers for the bond issue, ensuring the next administration can proceed without delay.The ability to issue bonds, granted in 2016, is seen as a significant step toward greater financial flexibility. Analysts believe it could enhance Scotland’s international investment profile and potentially offer better value for money than borrowing solely through the UK’s National Loans Fund.

However, critics argue that the positive credit ratings stem from Scotland’s position within the UK rather than its independent fiscal strength. Scottish Conservative finance spokesman Craig Hoy said:“Scotland’s strong rating exists because of the security and stability of the Union. The agencies have been clear — independence would weaken our economy.”

The credit rating assigned by global agencies affects investor confidence and determines the interest rate Scotland must pay on its borrowing. Under existing arrangements, the government may borrow up to £472 million for capital investment in the coming year, bringing total borrowing close to its £3.1 billion legal limit.