Paraguay has crossed a threshold that matters to big money. In December 2025, S&P Global Ratings raised Paraguay one notch to BBB-, its first investment-grade level, joining Moody's, which had already put the country at investment grade. That gives Paraguay two investment-grade ratings, the bar most large institutional funds require before they can allocate at scale, and it caps a steady climb up the credit ladder.
Photo: “Palacio de López 2023” by Office of the President of the Republic of China (Taiwan) / 總統府, Wikimedia Commons, CC BY 2.0, ja, skaliert (WebP)
What the Agencies Actually Did
Three agencies, three positions, all pointing the same way. S&P lifted Paraguay to BBB- in December 2025, citing strong economic growth, a commitment to low budget deficits, and the growing credibility of the central bank's monetary policy. Moody's got there first, awarding investment grade (Baa3) in July 2024 and affirming it on 17 July 2026. Fitch, the most cautious of the three, still rates Paraguay one notch below investment grade at BB+, but raised its outlook to positive in October 2025, a signal it may follow.
The headline is the double. With both S&P and Moody's at investment grade, Paraguay clears the two-rating threshold that unlocks a much larger pool of institutional capital.
Why a Rating Upgrade Is a Big Deal
Credit ratings are dull until you see what they gate. Many pension funds, insurers, and index funds are contractually barred from holding sub-investment-grade debt, so the jump from BB to BBB does not just improve sentiment, it changes who is legally allowed to buy Paraguayan bonds. That widens demand, lowers the government's borrowing cost, and tends to pull down rates across the economy over time.
It also validates years of fairly disciplined management: growth among the fastest in South America, a record of low fiscal deficits, and a central bank that has earned credibility. Ratings are backward-looking by design, so a double investment grade is essentially the agencies certifying a track record. That record is now being tested, since the annualized deficit widened to 2.6% of GDP by mid-2026.
Why It Matters
This does not stand alone. It sits with the IDB financing package and the Nasdaq-upgraded stock exchange as pieces of the same story: a small economy deliberately building the institutions that let outside capital in. For anyone weighing Paraguay as a base, the rating is shorthand for macro stability, the quiet backdrop that makes a long-term plan feel safer.
What It Means for Expats and Investors
For individuals the rating is context rather than a personal event, but a useful one. A more creditworthy sovereign usually means a steadier currency and public finances, which matters if you are moving savings or building a business here. Our overview of investing in Paraguay covers the practical routes in.
On tax, the usual precision applies. A better credit rating does not change how you are taxed. Paraguay's territorial taxation of foreign income turns on genuine tax residency, not on the sovereign rating, and US citizens and green-card holders remain taxed on their worldwide income regardless of residency. Take US-qualified advice if that applies to you.
Frequently Asked Questions
Is Paraguay investment grade?
Yes, from two agencies. S&P rates Paraguay BBB- (since December 2025) and Moody's rates it Baa3, both investment grade. Fitch still has it one notch lower at BB+, but with a positive outlook as of October 2025.
Why does Paraguay's investment-grade rating matter?
It widens who can lend to Paraguay. Many large funds may only hold investment-grade debt, so the upgrade expands demand for Paraguayan bonds, lowers government borrowing costs, and signals macroeconomic stability. It reflects strong growth and a long record of low deficits, although the deficit has widened during 2026.
Does the investment-grade rating change my taxes in Paraguay?
No. A sovereign credit rating is about government creditworthiness, not personal tax. Paraguay's territorial system still taxes foreign-source income at 0% in principle, and your position depends on genuine tax residency. US persons remain taxed by the IRS on worldwide income wherever they live.
Disclaimer: This article is general information, not investment, legal or tax advice. Sovereign ratings and outlooks change over time. Confirm the current ratings with the agencies or an official source before acting on them.
Sources
- ▹Bloomberg: S&P lifts Paraguay to investment grade, joining Moody's
- ▹Asunción Times: Paraguay's rating outlook upgraded to positive by Fitch
- ▹S&P Global Ratings: Paraguay's road to investment grade
Weighing Paraguay as a stable base? A short call walks through the residency route, the cédula and the trips involved. Questions about how a move affects your taxes go to a tax advisor we can introduce. Get in touch.
About the author
Yannick Schroth
Founder · Paraguay relocation support
Spends regular time in Paraguay and, with his team on the ground in Asunción, guides international nomads, entrepreneurs and investors through residency, the cédula and the RUC paperwork.
