Portugal Lands A+ Credit Upgrade, Signalling Cheaper Loans for Expats

Residents who have watched Portugal climb the investment-grade ladder over the past decade woke up to another step higher: the country now carries an A+ rating from S&P Global. For anyone earning, saving or investing in Portugal, that single notch could translate into lower interest bills, a sturdier job market and fresh waves of capital.

Why the upgrade quietly affects almost every expat budget

A better credit score is not just a vanity metric for the Finance Ministry. When lenders view the Republic as a safer borrower, the ripple effect reaches private wallets. Newly issued Portuguese bonds already trade a few basis points tighter, signalling that future Treasury auctions should demand less yield. Banks often peg variable-rate mortgages to government benchmarks; a softer yield curve can therefore help trim Euribor-linked instalments. Entrepreneurs also stand to gain: cheaper sovereign funding typically narrows corporate spreads, unlocking credit lines for start-ups from Braga to Faro. In short, an A+ seal, while technical on paper, may lower the financial temperature for day-to-day life.

The economic underpinnings S&P highlighted

Analysts at S&P talked up Portugal’s external deleveraging, noting that net foreign debt is set to fall from 122% of GDP this year to 102% by 2028. They praised a consistently robust labour market—unemployment is hovering near 6.5%—and the government’s knack for running budget surpluses even while political coalitions remain fragile. Growth will admittedly cool to 1.7% next year, but the agency believes NextGenerationEU funds and private capital can lift momentum back above 2% by 2026. Meanwhile, tourism continues to act as an economic airbag; holiday receipts cushion Portugal from manufacturing slowdowns hitting other eurozone peers. On the fiscal front, public debt is projected to slide toward 84% of GDP by 2028—one of the swiftest reductions in the currency bloc. For S&P, that trajectory outweighed worries about minority-government squabbling in the Assembleia da República.

How the four big agencies now line up

With S&P’s move, Portugal enjoys the highest mark it has held since the pre-crisis era. DBRS Morningstar sits just below at A (high), Moody’s sits at A3, and Fitch still calls the paper A-—though Fitch’s outlook is positive and could rise later this year. The consensus is clear: all classify Portugal solidly in investment-grade territory. The divergence does matter for certain global funds that follow one agency over another, yet most institutional investors look at the median rating, which now edges higher thanks to the S&P decision. For context, Spain is at A- with S&P, while Italy languishes at BBB. The upgrade therefore nudges Portugal further into the club of lower-risk European borrowers, potentially helping Lisbon lure capital that might previously have stopped in Madrid or Paris.

Markers to track before the next verdict

Expats keen to gauge whether borrowing costs can fall even further should watch three data points. First, the pace at which public debt-to-GDP shrinks: every additional percentage-point drop strengthens the odds of another upgrade from Fitch. Second, execution of the €22.2 B EU recovery envelope; delays could sap the growth rebound that S&P is banking on for 2026. Third, wage negotiations in the public sector: generous pay deals could reopen the fiscal taps just as Brussels reinstates Stability Pact rules in 2026. For now, though, Portugal has turned a corner few could have imagined during the bailout years—a storyline that bodes well for anyone building a future on the Iberian Atlantic.