Peru: Country risk reached 200 basis points

09:58 | Lima, Dec. 27.

The EMBIG Peru increased 3 basis points to 200, while the EMBIG Latin America decreased 3 bps to 441 between December 14 and 21, the Central Reserve Bank (BCR) reported.

According to the BCR, the rise in the EMBIG Peru occurs in a context of political uncertainty, whereas the EMBIG Latin America result was associated with the increase in U.S. Treasury bond yields (country risk indicators are calculated as the difference in yields with respect to the U.S. Treasury).

The interest rate on 10-year Peruvian sovereign bonds increased 25 bps between December 14 and December 21 and remains one of the lowest in the region.

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

Publicado: 27/12/2022