Peru’s country risk —measured by the EMBIG Peru spread— dropped from 216 to 203 basis points on June 15-22 this year, remaining lower than the regional average, the Central Reserve Bank of Peru (BCR) reported Saturday.
In the same period, the EMBIG LatAm declined to 536 basis points.
The region’s spread fell 19 basis points amid the decreased likelihood of Brexit and the consequent fall in risk aversion in financial markets.
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) RGP/RGP/RMB
Published: 6/25/2016