Scotland could see its credit status downgraded to 'junk' if it votes to leave the UK, according to Moody's, as a result of the pressures falling oil prices have placed on its public finances.
Last week, Scottish First Minister Nicola Sturgeon called for a second independence referendum to take place before Britain leaves the European Union, saying the country must be offered a choice between a 'hard' Brexit and becoming an independent country.
However, Prime Minister Theresa May rejected the possibility of a second referendum before the term of Britain's divorce from the EU are finalised, saying "now is not the time" for Scotland to leave.
Commenting on the potential for Scotland to become independent, Colin Ellis, chief credit officer for EMEA at Moody's, has warned the country would face "downward pressure" on its finances in the event of independence, according to The Times.
The warning comes as lower oil price, currently sitting at around $55 a barrel, have left Scotland facing a large budget deficit and worse off financially than before the previous referendum in September 2014.
Back in 2014, when the oil price was above $100, an independent Scotland could have received a rating between A and Baa, placing it within the investment grade bracket.
However, Moody's Ellis said current circumstances could see Scotland's rating drop to Ba, a junk status (also known as sub-investment grade), which would place it on a par with Azerbaijan and Guatemala.
Among other implications, this would mean other countries would demand a higher interest rates to lend to Scotland in the future, compared to the stable Aa1 rating currently held by Britain.
Speaking to The Times, Ellis said: "Nobody can predict oil prices but even if you take an optimistic view the fiscal position for Scotland has clearly worsened.
"That means you would be starting from a high fiscal imbalance that the Scottish government would immediately need to address. You would need to raise taxes or cut spending. If not, that would put the normal downward pressures on ratings."