The UK Government is claiming that independence would not affect the legal personality of the UK.

If the UK continues to exist as a legal entity, logically it would keep non-territorial assets, as well as all contractual liabilities, as Russia did on dissolution of the USSR.

Furthermore, the Treasury has stated that "the continuing UK Government would in all circumstances honour the contractual terms of the debt issued by the UK Government".

Despite this, representatives of the No campaign have argued that Scotland not taking on any debt would constitute a "default". What constitutes a default?

The majority of UK gilts are fixed- interest, fixed-term bullet bonds and there is generally no right to prepay. Debt service must be paid in full, at the scheduled times and by the contracting party. In relation to the final point, if halfway through the life of a bond, the UK transferred its obligations to another country, the UK would not have performed its contractual obligation to make all scheduled payments.

Even if bondholders agreed to the change, technically, the UK would have defaulted. The UK appears to have been slow to recognise this.

According to John McFall, the former Labour MP who was also chairman of the Commons Treasury Select Committee, "the Treasury and the Debt Management Office have been approached by investors, asking about the situation. Will, for example, the Treasury split the gilts into Scottish Government gilts and UK gilts, if that's the case, that would create real uncertainty and it risks Scotland being an international pariah".

This indicates that the UK had somehow managed to give investors the impression that it was contemplating an exchange into Scottish bonds. Lord McFall's suggestion that Scotland accepting the UK's demands to take on a share of debt would result in it becoming a pariah is illogical.

However, it is likely that the UK forcing an exchange on investors would have constituted a default by the UK. While the UK has been forced into the unusual position of publicly reassuring its investor base that it's not planning to default, it is not possible for Scotland to default on the UK's debt.

Rating agency definitions relate only to contractual obligations, for good reasons. If Scotland takes on £1 of debt, how do you establish that this is not the correct amount, given that there is no contractual amount? How do you determine whether Scotland is paying on a timely basis, given that there is no debt schedule? Whom do the agencies believe if Scotland says a fair share of the UK's debt is £10 billion and the UK says it is £100bn?

The argument appears to be that rating agencies and investors will see Scotland as having defaulted "morally" and this might damage its ability to raise finance.

This ignores the rating agencies' published criteria on how they look at situations where there has genuinely been a default.

"Standard & Poor's takes no position on the propriety of government debt defaults, repudiations, and the like." Instead, it says, "Standard & Poor's ratings are an opinion of the probability of default on a forward-looking basis. We analyse historical defaults to form our own view as to the extent that they could affect the likelihood of the sovereign defaulting in the future. In general, Standard & Poor's sovereign ratings apply only to debt that the present government acknowledges as its own".

Investors and rating agencies will assess the future probability of default on debt that Scotland has contractually bound itself to pay. The share of assets and liabilities that Scotland takes on as part of its exit from the UK is purely a commercial matter, which the UK is publicly pre-negotiating.

To minimise its future cost of debt, Scotland should demonstrate commercial competence, negotiate the best possible share of assets and liabilities and make full and timely payment on any contractual debt obligations that it takes on in the future.