The EMBIG Peru spread fell 10 basis points to 201 bps, while the EMBIG Latin America spread fell 26 bps to 467 bps between November 9 and 16, the
Central Reserve Bank (BCR) reported.
This occurred in a context of returning risk appetite due to expectations of lower interest rate hikes by the FED due to lower inflation in the United States.
The interest rate on Peruvian 10-year sovereign bonds, which increased 23 bps between November 9 and November 16, 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
Published: 11/21/2022