Measured by the EMBIG Peru spread, Peru's country risk declined to 160 basis points last September 21, the lowest level recorded among main Latin American economies, Central Reserve Bank of Peru (BCR) reported Friday.
So far this year, Peru's country risk has stood below Chile (175 bps), Colombia (226 bps), Mexico (278 bps), Brazil (318 bps) and Argentina (430 bps).
It is worth noting the Inca nation's country risk has fallen 80 basis points since December 2015, from 240 bps to current 160.
BCR highlighted the risk indicator recorded as of September 21 is close to a third part of Latin America's average country risk (460 bps) and less than half of that of emerging economies (359 bps).
The drop was recorded on September 14-21 amid positive signals of economic activity in China and the U.S. FED's decision to hold its interest rates unchanged in the ninth month.
What does the country risk measure?
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.
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