Scotland to Issue First Government Bonds in Centuries, Signaling Push for Financial Autonomy

Edinburgh, Scotland – Scotland is set to issue its first government bonds in over 300 years, with the Scottish Government planning to sell approximately £1.5 billion of its own debt, dubbed "kilts," starting in the 2026-27 financial year. First Minister John Swinney announced the initiative, framing it as a crucial step towards greater financial autonomy and building credibility for a potential independent Scotland. The move follows investment-grade credit ratings of Aa3 from Moody's and AA from S&P Global, matching the UK's sovereign rating.

The planned issuance aims to fund essential infrastructure projects across Scotland, with First Minister Swinney stating the goal is to "borrow better, not more." This financial maneuver is seen by the ruling Scottish National Party (SNP) as a means to establish Scotland's financial reputation and engage directly with global investors, reinforcing its long-term fiscal independence aspirations. The Scottish government has possessed the power to issue bonds since 2015 but is now activating these powers.

However, both Moody's and S&P Global cautioned that their favorable ratings are underpinned by Scotland's current position within the United Kingdom's devolution framework. S&P Global explicitly stated, > "We could also lower the rating if Scotland took material steps toward independence from the UK." This sentiment was echoed by Moody's, which noted that independence could "exert downward pressure on the rating by introducing heightened uncertainty."

The historical context of Scotland's last foray into independent debt markets in the late 17th century ended disastrously with the Darien scheme, a factor that contributed to the 1707 Acts of Union. Critics, such as Scottish shadow finance secretary Craig Hoy, argue that Scotland's strong credit rating is a direct result of its membership in the UK. The bond issuance is subject to the outcome of the Holyrood elections in May 2026 and prevailing market conditions.