The Scottish Government has confirmed plans to enter the bond market and issue £1.5bn of debt in 2026-2027.
Ben Ashby, chief investment officer at Henderson Rowe told The Desk this ‘vanity project’ leaves investors facing multiple legal, fiscal and currency risks if Scottish independence move forward.
Scottish first minister John Swinney confirmed that the Scottish government intends to establish a Scottish government bonds programme with issuance as soon as practicable, in effect in 2026-2027, following secondary legislation at Holyrood. The £1.5bn bonds issuance would finance infrastructure and sit alongside existing borrowing from the UK’s National Loans Fund.
He said: “Issuing bonds will enable us to access a new pool of investors… and give the people of Scotland an opportunity to invest directly in our country,”
The issuance details announcement follows new ratings from S&P and Moody’s. The Aa3/AA ratings from Moody’s and S&P are explicitly based on Scotland remaining inside the UK’s fiscal and legal framework.
In its rating decision document, Moody’s is very clear about this conditionality. They say: “[Scotland’s rating incorporates a] very high likelihood of extraordinary support from the UK government”.
Moody’s also states that this rating would come under pressure if independence was to be pursued.
Read more: Scotland rated AA/Aa3 ahead of debut ‘kilt’ bonds
Those caveats echo warnings from market practitioners such as Ashby, who argues that a Scottish bond outside the UK would carry major structural risks.
He told The Desk: “Scotland doesn’t need to issue debt separately. It’s just yet another vanity project with additional cost for taxpayers The Scottish government has paid for ratings reports that say as long as Scotland is within the UK and supported by British taxpayers and constrained by the devolution agreement it can have a decent rating. And if it goes independent then all bets are off. Any professional bond manager could have told them that for free. I am looking forward to the risk disclosures in the bond prospectus.”
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