Peru’s country risk indicator, measured by the EMBIG Peru spread, fell in average terms in the week of May 12-19, remaining below the regional average, the Central Reserve Bank of Peru (BCR) reported Saturday
According to the BCR Weekly Economic Report, the country risk indicator fell from 164 to 163 basis points.
On the other hand, the EMBIG LatAm spread rose 11 basis points amid negative data of economic activity in the United States and China and uncertainty about
Greece.
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.
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) JCC/JCC/RMB
Published: 5/23/2015