Peru: Country risk remained below regional average


The Peruvian Reserve Bank has reported that Peru’s EMBIG spread stood at 144 bps, while the Latin America’s EMBIG decreased 31 bps to 419 bps on November 4-11. The Peruvian indicator remained below the regional average and was in line with the results of the elections in the United States. The index is measured based on the difference between the spread of Peru sovereign bonds over yield of U.S. Treasury bonds.

The country risk measures the ability of a country to meet its financial obligations and the implicit political risk and, based on that, receives an international credit rating. The main consequences of a high country risk are a drop in foreign investment and lower economic growth, which could lead to unemployment and low wages. This is an orientation index for investors because it indicates the risk of doing business in a country is more or less high. It should be noted that the higher the risk, the less likely projects obtain a return in accordance with funds; and the lower this index is, the more attractive the country will be to investors.