Aberdeen could have to repay its £370million capital bond in just two months if Scotland goes independent- senior council figures have warned.
Last year the local authority became the first in Scotland to issue a bond on the London stock exchange, which is due to be fully repaid to investors by 2054.
But a clause in the contract warns that if an “independence event” takes place then the bonds may be redeemed in just two months.
Last night, members of the Labour-led administration said the prospect of independence could risk ambitious infrastructure projects in coming years and lead to a downgrading of the city’s credit rating.
But SNP group leader Stephen Flynn said the claim was an “outlandish assertion” adding that risk was involved in any bond issue.
Finance convener Willie Young said if all the investors pulled out then the city would be “set back more than 20 years”.
He said: “The most likely scenario we would face would be simply that we’d have to pay the money back within two months, depending on how many investors withdrew.
“We are legally committed to projects like the new AECC and the Berryden Corridor so they would still be built but we would then have to cut elsewhere to pay for them.
“The markets aren’t daft, the reason they wanted to insert a specific mention to independence is that they understand the financial strength of the UK economy. They didn’t mention Brexit.
“Public services would have to be cut to pay the debt and it would be the people in the city who would have to bear the brunt of the nationalist’s constitutional obsession.”
Mr Flynn said: “We’re all well used to outlandish assertions from Willie Young but to suggest that investors would scramble to grab back their money is just bizzare.
“Risk is inherent in any bond issue but if that situation did arise, I’m puzzled as to why he would suggest that any future Scottish Government wouldn’t have a facility in place for council’s to borrow from.
“I would have thought that councillor Young would be more concerned with the potential interest rate consequences of a hard Brexit, the fact the UK credit rating has already been devalued since 2014 and that the value of the pound has plummeted – but that of course wouldn’t marry with his obsession with independence.”
