* "A" rating similar to Poland, Czech Republic and Mexico
* Junk rating a risk if split with UK turns acrimonious
* Currency union unlikely, would be negative for UK rating
* Independent Scotland would have higher borrowing costs (Adds further Moody's comments)
By David Milliken
LONDON, May 1 (Reuters) - An independent Scotland wouldprobably receive an investment-grade credit rating but facehigher borrowing costs than the rest of the United Kingdom,ratings agency Moody's said on Thursday.
Moody's is the first major ratings agency to say explicitlyhow it would be likely to grade the creditworthiness of Scotlandif it votes for independence in a referendum on Sept. 18.
The campaign against independence currently has a modestlead in polls.
"While there are significant uncertainties associated withScottish arrangements post-independence, an 'A' rating isperhaps the most likely at the outset, but with risks tilted tothe downside," Moody's said.
This would give Scotland a similar rating to countries suchas Poland, the Czech Republic and Mexico, and would be two tofour notches below Britain's Aa1 rating, meaning higherborrowing costs for the new Edinburgh government.
"It is reasonable to say they would be higher than the restof the UK, as Scotland has no established market presence,"Moody's analyst Sarah Carlson told Reuters.
Scotland could look forward to a higher credit rating overtime if markets grew more confident about the new government,and if Scotland tackled its fiscal issues, she added.
Moody's report is slightly more positive about Scotland'sprospects than one from rival ratings agency Standard & Poor'sin February, which said an independent Scotland would face achallenge that was "significant, but not unsurpassable".
However, the Moody's report noted that Scotland would riskstarting off with a speculative-grade rating - commonly referredto as "junk" - if the independence vote triggered protracted,acrimonious talks between London and Edinburgh.
A difficult split could also lead to the credit rating forthe rest of Britain being downgraded by one or two notches, itsaid.
One key area of contention is what currency Scotland willuse. The Scottish National Party government in Edinburgh wantsto retain use of sterling, but that is opposed by all the mainpolitical parties in London.
Moody's said the rest of the United Kingdom would be at aslight risk of a rating downgrade if it entered into a currencyunion with Scotland, and thought this arrangement unlikely.
By contrast, Scotland's rating would depend on reaching adeal swiftly and implementing the new currency arrangement well,rather than on keeping sterling, Moody's said.
However, a new currency could affect the ratings of banksbased in Scotland such as Royal Bank of Scotland andLloyds Banking Group - for example if sterling bondswere converted into a new currency that soon lost value.
Overall the prospects for Scotland's economy afterindependence were likely to be similar enough to now for othercorporate bonds to be much affected. (Reporting by David Milliken; editing by Andrew Roche)
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