Aberdeen City Council becomes first Scottish local authority to be awarded a credit rating

Aberdeen Harbour - Image credit: Duncan C via Flickr

Aberdeen City Council has become the first local authority in Scotland to be assigned a credit rating as it prepares to invest in major infrastructure projects such as the new Aberdeen Exhibition and Conference Centre (AECC).

Credit rating agency Moody’s announced on Friday that it is awarding Aberdeen an Aa2 negative rating, one below the UK’s overall rating of Aa1 negative.

The negative outlook mirrors that of the UK as a whole following the Brexit vote.

Moody’s said its decision reflected Aberdeen City Council’s “strong institutional framework” and “strong track record of operating performance”.

It also mentioned Aberdeen’s “wealthy local economy, albeit dependent on key industries”.

The announcement follows a rigorous process of assessment and risk analysis which tested the authority’s financial management and corporate governance.

Moody’s said: “The council has demonstrated a solid financial record for the last 5 years maintaining a net surplus against budget for each year.”

It noted that while the Aberdeen economy has some exposure on the oil and gas industry, the current fiscal framework provides insulation from the impact for Aberdeen City Council itself.

The assignment of the credit rating will allow Aberdeen City Council to consider “innovative” new funding mechanisms, including access to debt capital markets.

Aberdeen City Council leader Councillor Jennifer Laing said: “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.

“Today’s announcement is another significant step towards realising our ambitions.”

As well as the AECC, planned major capital projects include the City Centre Masterplan, school and housing developments, roads construction, digital enhancements and other projects designed to promote economic growth.

In January a city deal was announced for the Aberdeen region, which will see £500m invested in infrastructure projects including the expansion of Aberdeen Harbour and a new oil and gas innovation centre.