The Scottish Government has been ranked as high investment grade by two global credit rating agencies, but has been warned that moves towards independence could see it revised downwards.
Moody’s rated the Scottish Government as Aa3 and S&P Global rated it as AA, both identical to the UK’s Sovereign rating, matching the UK and better than Spain, Italy and Japan.
They highlighted the strength and diversity of Scotland’s economy, its strong institutional framework, and the government’s prudent financial management and low levels of debt.
Moody’s said the rating “is not an indicative credit rating for an independent Scotland” and is “supported by the well-established devolution framework that Scotland operates under, with a requirement to maintain a balanced budget and predictable grant allocation.”
It added that “Scottish independence could exert downward pressure on the rating by introducing heightened uncertainty about the institutional framework and potentially raising financial stability risks.”
S&P Global added: “We could also lower the rating if Scotland took material steps toward independence from the UK.”
Following the ratings announcement, First Minister John Swinney confirmed the first in a £1.5 billion bond programme over the life of the next parliament, subject to the outcome of the Scottish Parliament election, in-year borrowing requirements and market conditions. The bonds – dubbed ‘kilts’ (Scottish gilt) – will earn interest for investors.
Mr Swinney said the government was “now on track to commence the bond programme from 2026/27, with the proceeds used to fund capital investment in key infrastructure.
“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.
“And, 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.”
Angus Macpherson, chairman of financial advisory firm Noble and Co, and former co-chair of the Investor Panel, said: “I am 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. This is a positive step forward and demonstrates they are serious about becoming a more investor friendly destination.”
Commenting on the credit rating, Finance Secretary Shona Robison said: “This is an excellent result – on a level with the UK’s sovereign rating and better than many major industrial countries – which reflects our strong track record of prudent fiscal policy and responsible debt and financial management.
“High credit ratings will support our wider efforts to boost economic growth by providing one of the clearest signals that Scotland is a place to invest in and do business.
“The credit ratings will also support plans for a future Scottish Government bond issuance.”
The Scotland Act 2016 devolved powers to Scotland to allow the issuing of government bonds for capital investment.
As part of the 2025-26 Scottish Budget process, the Scottish Government set out an update on Scottish Government borrowing policy and progress towards a future bond issuance.
The Scottish Government is being advised by EY.
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