Peru's country risk has dropped 12 basis points between October 6 and 13, going from 185 bps to 173 bps, the
Central Reserve Bank (BCR) has reported.
Likewise, the EMBIG Latin America spread dropped 2 bps to 400 in the same period.
According to the issuing entity, this result came in the context of lower risk aversion as a result of the progress made in the negotiations on the U.S. debt limit.
In addition, this means the EMBIG Peru spread remains below the regional average.
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.
The index is measured based on the difference between the spread of Peru sovereign bonds over yield of U.S. Treasury bonds.
(END) NDP/RMB
Published: 10/16/2021