By Mark McSherry
The Scottish Government is pressing ahead with its plans to go directly to the international bond market for the first time in its own right, Deputy First Minister Kate Forbes has revealed.
Bonds, debt securities, are a routine form of borrowing for sovereign and sub sovereign governments around the world.
Forbes told the UK Investment Association’s Scottish Investment Conference in a speech that she believes there is a very strong investment case for a Scottish bond.
After the speech, Forbes said: “This is about so much more than just raising additional capital.
“This … is about the Scottish Government exerting its muscles in a new way … and … building up the infrastructure, the reputation, and the evidence base for why investors should invest in Scotland …
“There are a number of stages that are required before we get to the point of issuing of the bond, including quite extensive financial advice …
“The point I would make is that the process matters actually just as much as the destination here … the process to get there is just as valuable as the end point …”
Former First Minister Humza Yousaf first revealed the Scottish Government’s plan to sell Scottish bonds in October 2023.
Forbes added: “(The Scottish bond gives) the opportunity to engage with investors and to focus on the opportunities in Scotland …
“Plans have been progressing over the course of this year and you’ll soon start to see an increase in activity about the bond.”
In 2017, Aberdeen City Council launched a successful £370 million bond issue. The bond issue was oversubscribed and was a first for a Scottish council. The £370 million was used to support a £1 billion capital programme for the city.
Asked why Scotland’s other big councils including Edinburgh and Glasgow have not followed Aberdeen’s example, Forbes said: “Local government finance is a question for local government. How they invest in capital projects is a choice for them.
“It has always struck me as somewhat ironic that local government have had broader powers, funding powers, for longer than the Scottish Government.
“The Scottish Government is still a relatively new player … and we are obviously exploring how we use these powers …
“But … local government have had those powers … for longer … and every local authority will be dealing with different levels of debt.”
Forbes’ comments came as the Scottish Government said she will take on a cross-government leadership role as the Scottish Government’s “Investment Champion” to deliver “a national pipeline of strategic investment opportunities and a seamless, co-ordinated approach to building relationships with investors and developers.”
Practical steps being delivered include an “Investment Unit” to identify and tackle barriers to investment; the creation of a single portal for investment inquiries and another detailing investment opportunities; and a new Cabinet sub-committee to co-ordinate activity.
Forbes added: “Increasing the level of private investment into Scotland’s economy is essential to our ambitions – for growth, for jobs, for reaching net-zero, and for improving our public services. Without investment and the growth it can catalyse, we can achieve none of those goals.
“I will be working to tackle barriers and blockers; and to ensure that the system as a whole works cohesively, effectively, and quickly, to support investors and to deal with issues as and when they arise.
“Scotland has the talent, skills and resources in abundance to be a major player in the energy transition and secure a prosperous and sustainable future. We need to work better, smarter, and quicker to ensure that we can create an investor-friendly environment and seize the many opportunities which lie ahead.”