A few bullet points on the Scottish referendum

The most high profile exposure is via UK bank names and UK government bonds. We see some room for deposits to move around ahead of and in the event of a "yes" vote, but we do not see a material impact on the banks. We see potential for additional volatility in the UK government bond market, but do not view a "yes" vote as a materially negative credit event for the sovereign. We expect the remaining UK (rUK) would maintain its double-A ratings. Investors should draw comfort from the backstop provided to the government bond market by the Treasury and BoE earlier this year.
    While rating agencies have preliminarily indicated that an independent Scottish sovereign might be single-A rated, we would need to have some sense of what the nascent financial system might look like in order to guesstimate a rating. Some key questions that would need to be resolved during the 18-24m negotiations following a "yes" vote include: currency, central bank and lender of last resort, maritime borders and resource sharing of North Sea oil, EU membership, and NATO membership.
    Scotland represents about 8% of the current UK population and economy. This referendum is the latest step in a steady progress of devolution of power to Scotland. At this point, the Holyrood government in Scotland is largely responsible for key policies especially related to education and the National Health Service, with additional taxation powers already scheduled to begin in 2016. Even if Scotland votes no, we will continue to see more authority devolved from London to Edinburgh.
    Scotland has broader implications for the standing of nation-states, most notably impacting the scheduled November vote on Catalan independence in Spain. Catalonia is nearly 20% of Spanish GDP and the Spanish sovereign has maintained a hardline stance in negotiating with Catalonia that should further raise risks around Spanish assets.