NE Scotland, Orkney & Shetland

Markets may fund Aberdeen's £1bn investment plan

AECC plan Image copyright .
Image caption The city council's plans include the new Aberdeen Exhibition and Conference Centre

Aberdeen City Council has said it hopes to become the first local authority in Scotland to raise funds through the capital markets.

It revealed index-linked bonds may be launched in the near future "subject to market conditions".

The council has already become the first in Scotland to be given a credit rating, with Moody's Investors Service confirming an Aa2 issuer credit rating.

Aberdeen said the funding would support a £1bn capital programme.

Council leader Jennifer 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.

She added: "By being proactive in our approach to capital funding, we are clearly being mindful of our duty to protect the revenue budget which is the bedrock of our service delivery."

The plan has the backing of the Scottish government. It believes other local authorities could go down a similar route.

Finance Secretary Derek Mackay said: "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."

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