A benchmark indicator for stock markets when analyzing the financial security of a country, especially in Latin America, is the so-called Emerging Market Bond Index (EMBI), popularly known as "country risk".
Currently, according to this index, compiled by the American consulting firm JP Morgan Chase, Peru has become the economy of the region with the lowest country risk.
According to the latest data from Latin America, collected by Statista (a provider of market data and consumer information) in early January, Venezuela has the highest percentage of defaulting debt, at 157.5%; second is Argentina with 19.3%, and then Mexico with 3%.
This is followed by Brazil, with a country risk of 2.2%, Colombia, with 1.7%, Chile, with 1.4% and finally Peru, with 1.1%, making it the Latin American economy with the lowest financial risk.
Learn more about country risk
Country risk measures a country's ability to meet its financial obligations, and the political risk involved. According to this, it gets an international credit rating.
The EMBI is measured by the difference in the average yield of a country's sovereign bonds versus the yield of U.S. Treasury bonds, which are considered risk-free.
From the comparison, a differential known as the "spread" is obtained: the higher the risk, the greater the probability that the debtor State will breach the terms.
Having a high level of country risk can affect the arrival of foreign investments, which consequently produces lower growth of the Economy.