An international financial services firm has given the Aberdeen economy a huge boost – by making the local authority the first in Scotland with a credit rating.
The city council will now be able to borrow on global debt markets to help it invest in new projects and offset future cuts in its government.
The renowned Moody’s Investors Service has given it an Aa2 rating – just one level below the UK’s Aa1.
Last night, the move was hailed as sending out a message to the world that Aberdeen is “very much open for business” despite the downturn in the offshore industry.
The city council has about £100million in reserves – but expects to run a budget deficit of £30million by 2020 based on predicted cuts to its grant and a 3% rise in council tax.
The authority applied for the rating and was then rigorously assessed and risk-analysed to test its financial management and corporate governance.
Council leader Jenny Laing said last night: “Being assigned a credit rating, a first for a Scottish local authority, is a vital step forward for us as we explore options to fund what is a comprehensive capital programme designed to support the city’s growth and diversification during a crucial period for Aberdeen.
“We are committed to investing in a bright and prosperous future for the people of Aberdeen and the businesses in our city, with transformation already well underway.
“This is another significant step towards realising our ambitions.”
Major projects included in the long-term capital programme include the city centre masterplan, school and housing developments, roads construction and ambitious digital enhancements.
Martin Gilbert, chief executive of Aberdeen Asset Management, welcomed the rating last night.
He said: “It’s clearly a good idea for there to be more flexibility for the city and to have new options for borrowing.
“This is a good credit rating and I think it’s a boost for the city.”
Local authority finance convener Willie Young said: “This process and our achievement in gaining an Aa2 credit rating serves as a very positive independent assessment of Aberdeen City Council’s stability and strength.
“This is all about opportunities, Aberdeen is competing on a global level and I think this rating reflects that.
“This sends a strong message to businesses and the market that Aberdeen is very much open for business.”
SNP finance spokesperson Graham Dickson said: “The effort and skill of our financial officers should not be underestimated and this is a credit to their talents.”
Aberdeen South SNP MP Callum McCaig said: “I think it’s good to see the council finance team exploring all the options to fund the city’s capital programme in years to come.”
Moody’s said its decision reflected the council’s “strong institutional framework” as well as a “strong track record of operating performance”.
It added “the council has demonstrated a solid financial record for the last five years maintaining a net surplus against budget for each year”.
But the statement predicted a “negative” outlook and noted Aberdeen’s “wealthy local economy, albeit dependent on key industries”.
Tens of thousands of jobs have been lost because of the continuing low oil price.