Aberdeen becomes first Scottish council to issue bonds

4 Nov 16

Aberdeen City Council has become the first council in Scotland to raise finance through a bond with a £370m issue to boost investment in the city.

The Labour-led authority said the issue on 2 November formed part of a fiscally prudent financial strategy and came after it received a credit rating of Aa2 from Moody's.

The funds will support a development programme for the city. This will involve redeveloping the city’s exhibition and conference centre, transport improvements and building 3,000 homes over the next 15 years, as well as schools.

Council leader Jennifer Laing said this represented “a remarkable achievement” by the council to become the first authority in Scotland to use the capital markets.

“To continue to compete on an international stage, it is vital that we deliver world class facilities for Aberdeen's citizens, businesses and visitors. Today's announcement is a major boost towards that objective,” she said.

Finance, policy and resources committee convener Willie Young added: “The bond issue is part of our strategy to maintain a diversified funding portfolio that provides us with greater financial flexibility.

“This flexibility will help Aberdeen anchor its status as both a global energy hub as well as ensuring that we have the infrastructure required to attract world class businesses as we seek to broaden and diversify our economic base.”

The development of the issue was welcomed by the Scottish Government, which has been encouraging authorities to explore the potential of part-funding their capital programmes in the commercial marketplace.

Scottish finance secretary Derek Mackay, himself a former council leader, said: “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,” Mackay said. “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.”

The initiative comes as the UK Municipal Bond Agency has declared itself open for business and has been preparing for an issue.

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