The country risk—measured by the EMBIG Peru spread—decreased 4 basis points (bps) from 114 to 110 between September 30 and October 6, the Central Reserve Bank (BCR) reported.
In the same period, the EMBIG Latin America spread decreased 8 bps from 198 to 190.
The metric 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.
(END) NDP/MVB