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Getty Images<\/p>\nCraig WilliamsBBC Scotland<\/p>\n
Getty Images<\/p>\n
Government bonds allow money to be raised through the markets<\/p>\n
The Scottish government is “on track” to issue its first ever bonds in the next financial year, according to the first minister. <\/p>\n
John Swinney 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.<\/p>\n
The news came as the Scottish government was given the same status as the UK by two global credit rating companies.<\/p>\n
The government wants to issue bonds – which will allow it to borrow money<\/a> from investors who in return receive regular interest payments – to raise money for infrastructure projects.<\/p>\n Credit rating company Moody’s rated the Scottish government as Aa3 while rivals S&P Global rated it as AA, both identical to the UK’s sovereign rating.<\/p>\n Moody’s said its rating was based on the Scottish government’s “prudent fiscal management” and the country’s economic stability.<\/p>\n S&P said Scotland’s economy was “strong” with the country operating “within a stable and predictable institutional framework that provides strong oversight and well-defined arrangements with the UK central government.”<\/p>\n Both agencies cautioned that their ratings could potentially be cut if Scotland moves towards independence.<\/p>\n Swinney 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”.<\/p>\n He said Scotland is “now on track to commence the bond programme from 2026-27, with the proceeds used to fund capital investment in key infrastructure”.<\/p>\n “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,” he said.<\/p>\n “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.”<\/p>\n The Moody’s report included independence as a possible factor which could see Scotland’s credit rating downgraded.<\/p>\n It 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.”<\/p>\n Swinney said details of how the bonds will be issued will be subject to market conditions closer to the time.<\/p>\n He added 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 scheme.<\/p>\n What are government bonds?<\/p>\n When a government wants to borrow money from investors, it sells them something called a bond, which is a loan the government promises to pay back at the end of an agreed time – say five, ten, or 30 years. <\/p>\n The government will also make regular payments – which can be once every three months, six months, or year – to the investor.<\/p>\n In the UK, a government bond is called a gilt. As a play on this term, the Scottish bonds have been nicknamed “kilts”.<\/p>\n