Peru’s country risk indicator, measured by the EMBIG Peru spread, fell 13 basis points from 179 to 166 in the last month as of April 14 this year, reported Saturday the Central Reserve Bank (BCR).
This way the country risk indicator remained below the regional average, which stood at 483 basis points as of April, a 54 basis point reduction.
According to the BCR Weekly Economic Report, the EMBIG LatAm spread fell amid positive signals of economic activity in the Eurozone and mixed indicators of activity in China.
The country risk measures the ability of a country to meet its financial obligations and the implicit political risk, and based on that, the country 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 that the risk of doing business in a country is more or less high.
I 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) JJN/JJN/RMB
Published: 4/18/2015