Aberdeen City Council has taken the first steps towards issuing its own bonds on the London Stock Exchange.
Council chiefs claim that monies generated could be used for the ongoing £1 billion capital programme and have hailed the potential issue as “one of the most significant events in the history of the city”.
If the scheme proceeds as planned, Aberdeen will become the first council in Scotland to raise funds through the capital markets.
This could lead to money being generated for such initiatives as the 25-year city centre masterplan project.
Council insiders have told the Press and Journal the index-linked bonds may be launched in the near future.
Moody’s Investors Service confirmed an Aa2 rating on October 7, with the council becoming the first local authority in Scotland to be assigned a credit rating.
Aberdeen makes a major contribution to the Scottish and UK economies, with a Gross Value Added (GVA) contribution of £18bn and a GVA per head of £37,460 – the highest in the UK after inner London and 65% higher than the Scottish average.
Council leader Jenny Laing said: “The prospect of a bond issue has the potential to be one of the most significant events in the history of our city.
“Following on from the assignment of the credit rating, it would be another first for a Scottish local authority and we are proud to be leading the way with innovation in public sector finance.”
Finance convener Willie Young added: “We have explored a wide range of options as we continue our investment in a capital programme which will support the city’s growth and diversification during a crucial period for the region.
“The launch of a bond issue would be a hugely important step forward.”
Derek Mackay MSP, the Scottish Government’s finance secretary, responded: “We welcome Aberdeen City Council’s innovation in using the capital markets as a route to finance.
“Investment in infrastructure throughout the country is vital to Scotland’s future and this bond issue has the potential to support a number of key projects in Aberdeen in the years ahead. It is a funding mechanism which has great potential for wider use in Scotland.”
“These key projects planned for Aberdeen in the years ahead will be good for the city, for the north-east and for Scotland as a whole.”