Speaking at an event at Scotland House London, First Minister John Swinney announced the initiation of procurement processes to appoint banks and legal advisers, marking a significant step in the Scottish Government’s strategy to fund major capital projects.

This initiative targets a £1.5 billion programme over five years, intended to finance infrastructure developments across the nation. The procurement phase launching this week seeks ‘book runners’ – banks acting as joint lead managers – alongside legal counsel to facilitate the issuance. The delivery of this programme remains subject to the outcome of the upcoming Scottish election, but the Scottish Government is proceeding with the necessary groundwork supported by EY.

The First Minister said: “Our intention is to make Scotland the most attractive destination for investment in the United Kingdom and our bonds programme is one of the ways we will do that.

“We also want to diversify our sources of borrowing so as to maximise value for money for Scotland’s taxpayers. A Scottish Government bond issuance will enable us to structure our debt more effectively – using the powers we have to borrow better, not more.

“Whilst specific issuance plans will be subject to market conditions closer to the time,  these bonds will raise the funding needed to support delivery of the capital infrastructure projects outlined in our recently published Spending Review and Infrastructure Investment Pipeline.”

The move is bolstered by Scotland receiving a credit rating equal to that of the UK last year, placing it ahead of major economies such as Spain, Italy, and Japan. Credit agencies cited Scotland’s diverse economy, strong institutions, and prudent financial management as key factors in this assessment.

The ability to issue bonds stems from powers devolved via the Scotland Act 2016. Following a 2023 recommendation from the Scottish Government’s Investor Panel to raise the country’s profile, the proceeds are earmarked exclusively for capital investment. This aligns with the capital borrowing powers outlined in the Fiscal Framework agreement between the Scottish and UK governments.