Finance
Scotland gets AA debt rating from S&P ahead of 'kilt' bond plans
Published by Global Banking and Finance Review
Posted on November 13, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on November 13, 2025
2 min readLast updated: January 21, 2026
Scotland gains an AA debt rating from S&P, facilitating kilt bond issuance. Independence efforts may affect future ratings.
LONDON (Reuters) -Scotland has been awarded an AA government debt rating from leading credit rating agency S&P Global, a major step towards the issuance of so-called "kilt" bonds, but the firm said that would likely drop if a renewed drive for independence emerges.
The announcement is the first time the Scottish government has been awarded its own rating by S&P. The AA grade matches that of the broader UK rating, now under pressure due to a rising debt-to-GDP ratio of nearly 100%.
Separately, Moody's assigned Scotland a rating of Aa3 - a notch lower on its scale than S&P's.
The ratings presage the planned issuance of kilt bonds - whose nickname nods to the British government's gilts - worth 1.5 billion pounds ($2.01 billion) in the next Scottish parliamentary term, with elections due to be held next May at the latest.
Unlike other European countries, the market for debt issued by regions and local authorities in Britain is tiny - which economists say has entrenched stark regional inequalities and London's financial dominance.
S&P cited Scotland's supportive institutional framework, a modest 10% debt-to-operating revenue ratio and the "substantial transfers" it gets from the UK government that cover most of its spending as the key reasons for the AA grade.
"The Scottish Government’s high credit ratings are testament to Scotland’s strong institutions, track record of responsible fiscal management and pro-business environment," Scotland's first minister John Swinney said in a statement.
S&P stressed the rating was likely to be cut if the country "took material steps toward independence from the UK" although it did not say by how much.
That looks unlikely for now after last year's UK parliamentary elections saw the main advocate of independence, the Scottish National Party, post its worst showing since 2010.
A Scottish debt crisis at the end of the 17th century helped bring about the 1707 Act of Union with England. Since 1709 all coins have been issued from London, though some Scottish banks issue their own banknotes.
($1 = 0.7451 pounds)
(Reporting by Marc Jones; Editing by Jamie Freed)
A credit rating is an assessment of the creditworthiness of a borrower, typically expressed as a letter grade. It indicates the likelihood that the borrower will default on their debt obligations.
Debt sustainability refers to a country's ability to manage its debt levels without requiring debt relief or accumulating further debt. It is crucial for maintaining economic stability.
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