Portugal's Leap to A+ Credit Status Unlocks Perks for Expats

Portugal’s sovereign upgrade is more than a headline for financiers. It signals cheaper funding for the state, steadier borrowing costs for households and businesses, and renewed confidence among global investors—advantages that will inevitably filter down to foreigners living, working or house-hunting in the country.

A rare leap to the “A+” club

The bump by S&P Global Ratings at the very end of August pushed Portugal into its highest credit bracket since the pre-crisis days of 2009. Analysts were caught off guard because the same agency had already lifted the grade in February. S&P said the surprise move was justified by the country’s “solid budgetary trajectory” and “significant economic deleveraging,” an assessment that places Portugal shoulder-to-shoulder with Ireland and just one notch below France on the agency’s scale. For expatriates and would-be migrants, the headline matters because a stronger rating generally translates into lower sovereign yields, which in turn support more attractive mortgage rates, a stable banking environment and calmer currency markets.

How did Lisbon earn the badge of confidence?

Behind the upgrade lies a string of budget surpluses, something still rare in the euro area. After trimming public debt from 125% of GDP in 2021 to 99% this year, the government is on track to reach 82% by 2028 according to S&P. It managed that while navigating fractious politics, minority coalitions and an economy heavily exposed to external shocks. Crucially, Portugal’s external position has improved: net foreign liabilities are falling and the current account remains broadly balanced, helped by a tourism sector that now accounts for 12% of GDP. S&P’s economists concede that higher defence spending and slow-burn social commitments will nibble at the surplus, yet they still see the debt ratio drifting lower.

Bond markets applaud—quietly

The immediate reaction played out in the secondary market for government paper. Ten-year yields slipped to 3.19% in early September, nudging the spread over equivalent German Bunds down to 44 basis points, the tightest since 2008. That differential is a handy shorthand for perceived risk: the narrower it is, the cheaper it becomes for Portuguese banks to refinance—good news if you’re renegotiating a variable-rate mortgage pegged to Euribor. Equity strategists at several investment banks told clients the rating action "cements Portugal’s status as a safe-haven within the periphery," noting growing foreign interest in technology, healthcare and hospitality stocks listed in Lisbon.

Debt trajectory in a European context

Portugal is not alone in trimming public debt, but the pace stands out. While the IMF foresees the ratio hitting 75.8% of GDP by 2030, Berlin is expected to stay above 60% and Paris above 100% for the same horizon. The independent Conselho de Finanças Públicas is more cautious, projecting 85.4% in 2029 and warning that political deadlock could reopen deficits as early as 2026. Even so, all three forecasters—S&P, the IMF and the CFP—agree the downward slope will persist, provided growth holds around 2% and structural reforms under the €16.6 B Recovery and Resilience Plan stay on track.

Eyes now turn to Moody’s and Fitch

Fitch already assigns Portugal an A- with a positive outlook, the textbook prelude to an upgrade, while Moody’s sits at A3 (roughly equivalent to A-) with a stable view. Fitch’s next sovereign review is pencilled in for March, and several analysts believe the agency could follow S&P’s lead if the 2026 Budget drama is resolved without fresh elections. Moody’s tends to move more slowly, but it has flagged “stronger-than-expected fiscal out-turns” as a trigger for reconsideration. Any further climb on the ratings ladder would place Portugal firmly among the eurozone’s upper-mid tier—helpful should another external shock test investor nerves.

What the upgrade means for foreign residents

For internationals drawing up medium-term plans, the benefits are mostly indirect yet tangible. A sturdier sovereign balance sheet underpins lower borrowing costs, supports euro stability and increases the odds that the government delivers pledged infrastructure—from high-speed rail to digital public services—without resorting to sharp tax hikes. Property loans indexed to the ten-year OAT were already drifting down; the S&P move adds downward pressure. Businesses eyeing Portugal as a gateway to the EU can now point to an A-range sovereign backstop, often a prerequisite for institutional investors and multilaterals that co-finance large projects. And for retirees living on foreign income, narrower bond spreads reduce volatility in Portuguese banks’ capital positions, a plus for deposit safety.

The bottom line

Portugal’s promotion to A+ is a hard-won vote of confidence in its fiscal stewardship and economic resilience. While the headline belongs to the Treasury, the ripple effects—cheaper credit, steadier markets, and enhanced investor appetite—stand to benefit anyone who has made the country home or is thinking about it.