The announcement by First Minister John Swinney follows rating agencies Moody’s and S&P assigning Scotland an investment-grade credit rating of Aa3 and AA, respectively, matching that of the UK.

This marks Scotland’s first independent debt issuance since the 17th century. Mr Swinney stated the move was a step toward building the tools for a prosperous future, emphasising the goal was to “borrow better”, not necessarily more.

The Scottish National Party (SNP) has framed the bond sales as a method of building credibility with financial markets and funding infrastructure, supporting its push for independence. The plan remains subject to the outcome of the May parliamentary elections and market conditions.

Both Moody’s and S&P noted their ratings are underpinned by the current UK devolution framework, where Scotland receives most of its funding from the central government. They explicitly warned that any move towards independence would put downward pressure on the rating.

While praising Scotland’s “prudent” fiscal policies and low debt, Moody’s also highlighted budgetary pressures from a population ageing faster than the UK’s.

Analysts expect “kilts” will need to offer a higher interest rate, or premium, compared to UK gilts. This is common for smaller issuers and is due to the new market having significantly less liquidity than the £2.5 trillion UK bond market. The government estimates the programme will incur additional annual costs of £2 million per bond issued.

The move is seen as an important symbolic step. Scotland gained powers to issue bonds in 2015, but Westminster imposes caps on the amount. Currently, Scotland borrows via the UK’s National Loans Fund.

The last Scottish public debt issuance was in the late 17th century by the Company of Scotland, whose losses were a contributing factor to the 1707 Acts of Union.