Portugal Keeps A+ Credit Rating: What Lower Mortgage Rates Mean for Residents

S&P Global Ratings is set to deliver its verdict on Portugal's creditworthiness today, a decision that carries real-world consequences for mortgage rates, government spending capacity, and the country's borrowing costs in international markets. Market analysts anticipate no change to the current A+ rating, following two consecutive upgrades in less than six months that lifted the nation into the upper tiers of investment-grade debt.

Why This Matters

• Borrowing costs stay low: A confirmed A+ rating keeps interest rates on Portuguese government bonds at historic lows, freeing up budget resources for infrastructure, health, and pensions.

• Investor confidence locked in: The stable outlook signals to international markets that Portugal remains a low-risk destination for capital, attracting foreign investment.

• Benchmark for mortgages: Credit ratings influence the broader cost of credit in the economy, including home loans and business financing.

The Consensus: Hold Steady After Rapid Gains

Financial experts surveyed ahead of the announcement agree that S&P is likely to keep Portugal at A+ with a stable outlook, a posture reflecting caution after an unusually swift series of improvements. Between February and August of last year, the agency lifted Portugal's rating three notches—from A- to A, then to A+—compressing into months what typically takes years.

João Cruz, a market analyst at Xtb, explained that rating agencies prefer to observe sustained performance before advancing further. "Since the August upgrade, macroeconomic data have remained consistent with the A+ level, but without sufficiently disruptive changes to justify another immediate revision," he noted. The trajectory of public debt continues downward and the fiscal framework remains disciplined, yet growth is moderate and external uncertainties persist—factors that support continuity rather than acceleration.

Filipe Silva, investment director at Banco Carregosa, echoed this view, emphasizing that S&P will prioritize confirmation of sustainability in fiscal execution, public debt dynamics, and economic resilience. "After two consecutive upgrades in a short span, the agency will want to see that these gains are durable," Silva said.

What Portugal Has Achieved—and What's Next

Portugal entered 2025 with an A rating and emerged with A+, a designation that places the country's sovereign debt firmly in the low-risk category. The August 29 decision by S&P shifted the outlook from positive to stable, signaling that the agency had already priced in expected improvements and would now monitor performance without an immediate upward bias.

The upgrade reflected a confluence of fiscal discipline, declining debt ratios, and external deleveraging. Portugal posted a budget surplus for the third consecutive year, a rare achievement within the Eurozone, while the debt-to-GDP ratio fell from 96% in 2024 toward a projected 84% by 2028. The country's external debt has also contracted, reducing vulnerability to foreign capital flows.

S&P's projections estimate GDP growth will slow to 1.7% in 2025 before recovering to 2.2% in 2026. The agency anticipates a small surplus of 0.2% of GDP in 2025, followed by a return to modest deficits starting in 2026. These forecasts align with broader expectations from Fitch and DBRS, both of which have also upgraded Portugal's ratings and maintained stable outlooks.

Impact on Residents and Investors

For those living in Portugal, the practical implications of a stable A+ rating extend beyond abstract financial metrics. Lower government borrowing costs translate into reduced pressure on public finances, allowing continued investment in social programs, transportation networks, and healthcare without resorting to austerity. The country's financing needs for 2026 are pegged at €13 billion, a manageable sum given the favorable interest rates Portugal now enjoys.

International investors treat credit ratings as a risk barometer. A+ status means Portuguese government bonds—Obrigações do Tesouro—are considered safe-haven assets within the Eurozone, attracting demand from pension funds, insurance companies, and sovereign wealth funds. This demand keeps yields low: the spread between 10-year Portuguese bonds and German bunds has narrowed to historically tight levels, reflecting market confidence in the country's creditworthiness.

For businesses and households, the ripple effect is tangible. Banks price mortgages, corporate loans, and consumer credit based partly on the sovereign risk premium. A stable rating environment supports competitive lending rates, making homeownership more affordable and business expansion more feasible.

Comparing the Big Three: Where Portugal Stands

Portugal's credit profile is now assessed by three major agencies, each with slightly different methodologies but converging conclusions:

| Agency | Current Rating | Outlook | Last Action ||------------|-------------------|-------------|-----------------|| S&P Global | A+ | Stable | August 29, 2025 (upgrade) || Fitch | A | Stable | September 12, 2025 (upgrade) || DBRS | A (high) | Stable | January 20, 2025 (upgrade), confirmed January 16, 2026 |

DBRS was the first mover in 2025, elevating Portugal to A (high) in January and confirming that rating in January 2026. The agency projects the debt-to-GDP ratio will fall below 90% and drop beneath the Eurozone average for the first time since 2004 sometime in 2026. DBRS anticipates the ratio reaching 83.2% by 2028, powered by large primary surpluses and moderate nominal GDP growth.

Fitch followed in September, upgrading Portugal from A- to A with stable outlook. The agency cited continuous debt reduction, balanced budgets, and solid economic growth. Fitch expects a budget surplus of 0.1% of GDP in 2025, followed by small deficits of 0.7% in 2026 and 0.4% in 2027. The debt ratio is forecast to decline to 88.4% by 2027.

S&P's A+ rating is the highest of the three, placing Portugal one notch above Fitch's assessment. The convergence of all three agencies on a stable outlook reinforces the narrative of macroeconomic continuity and absence of emerging imbalances.

Scope Ratings, a smaller European agency, has also assigned Portugal an A rating with a positive outlook, suggesting potential for further improvement if fiscal and growth trends persist.

Next week, Fitch will conduct its own review of Portugal's rating, providing another data point for investors. The last Fitch evaluation was in September 2025, when it delivered the upgrade. Any shift in Fitch's stance—whether a further upgrade or a change in outlook—would carry weight in markets.

The External Threats: Tariffs and Geopolitical Volatility

While Portugal's internal fundamentals are solid, the external environment remains a wildcard. Silva from Banco Carregosa noted that S&P will closely monitor budgetary execution, the government's ability to preserve political stability, the pace of structural reforms, and the impact of global geopolitical factors and potential tariffs on economic growth.

Trade tensions pose a direct threat to Portugal's export-driven economy. The United States, Portugal's fourth-largest export destination, has announced new tariff measures following a Supreme Court ruling that overturned parts of previous trade policy. A temporary global tariff of 10%, expected to rise to 15% on European goods, places Portugal among the eight EU members most exposed to the impact. The effective rate currently charged to Portugal stands at 8.5%, but an increase to 15% would hit key sectors hard.

Estimates suggest Portuguese exports to the U.S. could decline by €300M to €370M, resulting in the loss of 4,500 to 6,000 jobs, with the heaviest impact on petroleum derivatives, iron and steel, textiles, rubber products, and electrical equipment—industries concentrated in Portugal's northern industrial belt. The EU-U.S. trade agreement ratification process has been suspended pending guarantees from Washington regarding the practical application and real impact of the new measures.

In response, the EU-Mercosur trade pact, formally ratified in January 2026, offers some diversification. The agreement reduces tariffs on European agri-food products and opens new markets in Latin America. However, experts caution that the deal is insufficient to fully shield the EU from pressure exerted by global superpowers.

Beyond trade, geopolitical instability—ranging from cyber threats to regional conflicts—creates volatility that can disrupt supply chains and investor sentiment. Portuguese businesses report heightened concern over cybersecurity, disinformation, and the fragmentation of multilateral cooperation. The Global Risks Report 2026 warns of structural fragmentation, erosion of multilateralism, and a prolonged period of slower global growth, all of which could constrain Portugal's economic momentum.

What a Rating Freeze Really Means

A maintained A+ rating with stable outlook does not signal stagnation—it reflects validation of progress and an expectation that Portugal will continue on its current path. Credit agencies use stable outlook to indicate that the rating is unlikely to change within the next 12 to 18 months, barring major shocks.

For Portugal, this means the burden of proof remains on policymakers to sustain fiscal discipline, manage external risks, and advance structural reforms. The government's ability to navigate political stability—especially as coalition dynamics evolve—will be scrutinized. Any backsliding on deficit targets or debt reduction could trigger a negative outlook revision, even if the rating itself remains unchanged for now.

Conversely, continued outperformance—such as faster debt reduction, higher-than-expected growth, or successful implementation of EU-funded reforms—could shift the outlook back to positive, opening the door for future upgrades. Both Fitch and Scope maintain room for upward movement, with Scope already assigning a positive outlook to its A rating.

The Bigger Picture: Portugal's Decade-Long Comeback

Portugal's journey from the 2011-2014 Troika bailout to today's A+ rating represents one of the most striking fiscal turnarounds in modern European history. A decade ago, the country was considered a peripheral Eurozone risk, with yields on government bonds spiking to unsustainable levels. Today, Portugal borrows at rates only marginally higher than Germany, the bloc's benchmark issuer.

The transformation rests on a foundation of primary surpluses, pension and labor reforms, export diversification, and a resilient banking sector that emerged from the post-crisis restructuring in better shape. Tourism, technology, and renewable energy have become pillars of the economy, reducing reliance on traditional manufacturing and construction.

Yet challenges remain. Moderate growth relative to pre-pandemic levels, an aging population, and limited productivity gains constrain the pace of convergence with wealthier EU neighbors. Housing affordability pressures in Lisbon and Porto, driven by tourism and foreign investment, have created social tensions that could complicate future fiscal decisions.

The external balance sheet has improved, but Portugal remains a net debtor nation with a negative international investment position. Sustaining investor confidence requires not only fiscal prudence but also structural reforms that boost competitiveness and innovation capacity.

Conclusion: A Verdict That Matters Beyond Markets

Today's expected confirmation of Portugal's A+ rating may seem like a non-event to casual observers, but it carries real-world weight for residents, businesses, and policymakers. The rating determines the price of money for the government, influences the cost of credit across the economy, and shapes international perceptions of stability and opportunity.

For those living in Portugal, a stable A+ rating underwrites the economic security that enables public investment, employment growth, and access to affordable financing. It is both a reward for past discipline and a constraint on future choices—a reminder that maintaining credibility in financial markets requires consistent policy execution.

With Fitch's review scheduled for next week and DBRS having already confirmed its rating in January, the constellation of agency assessments will soon be complete. Barring surprises, Portugal enters the second quarter of 2026 with a strengthened credit profile, a manageable debt trajectory, and a credible fiscal framework—assets that will prove essential as the country navigates an uncertain global environment.