The credit rating agency highlights the region’s debt reduction, both in absolute and relative terms, expenditure control, and economic strength.
This credit rating upgrade will ease access to capital markets for debt issuance.
U.S.-based credit rating agency Standard & Poor’s has raised the credit rating of the Balearic Islands to A- with a positive outlook, the highest rating the region has received since June 2011. The report emphasises the reduction of debt, both in absolute and relative terms, spending discipline, and the robust regional economy.
This places the Balearic Islands at the same credit rating level as Andalusia, and ahead of other Spanish autonomous communities such as Castilla-La Mancha, Castilla y León, Extremadura, Catalonia, and the Valencian Community.
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Standard & Poor’s Upgrades the Credit Rating of the Balearic Islands to A- with Positive Outlook, the Highest Since June 2011
The A- A-A-rating falls within the investment-grade category that Standard & Poor’s considers suitable based on the region’s capacity to meet its financial commitments and the absence of default risk. Furthermore, the upgrade in outlook from stable to positive reflects the agency’s confidence in further improvements in upcoming reviews. This is expected to enhance borrowing conditions, lower financing costs, and increase investor interest.
The report also highlights that the Balearic Islands benefit from a prudent and experienced management team, reinforcing confidence in the region’s future fiscal governance. Despite a rise in operational spending in recent years, the region has shown a clear commitment to aligning expenditure growth with revenue increases. The report explains that much of the spending increase stemmed from extraordinary expenses linked to court rulings, including personnel-related costs, and anticipates that operational spending will slow in line with income growth moving forward.
The Balearic economy, driven by the strength of its tourism sector, has allowed the credit agency to assess the region’s growth potential as above the national average, backed by solid economic performance and the government’s commitment to maintaining balanced budgets. This is expected to support positive budget indicators and continued debt reduction.
A clear downward trend in debt levels over the current legislative term has been a decisive factor in the improved credit outlook. The regional government has reduced public debt by €578 million, with the debt-to-GDP ratio falling to 18.8% by the end of 2024, its best level since 2012 and already below the national targets set for regional governments.
The Independent Authority for Fiscal Responsibility (AIReF), in its latest report published on April 11, 2025, forecasts that the Balearic Islands’ debt will fall to approximately 17.6% of GDP in 2025. AIReF has also raised its economic growth forecast for the region to 2.9%, two-tenths higher than the government’s projection.