Uruguay began 2024 as the country of Latin America with minor risk country, According to the recent report of the Market Bond Indicator Emerging (EMBI)calculated by JP Morgan Chase.
The EMBI is the main indicator of risk country, and is calculated from the difference of interest rate that pay dollar-denominated bonds issued by underdeveloped or developing countries, and bonds of the United States Treasury —treasuries—, which are considered “risk-free.” This information is essential for the access to credit by the countries, as it is considered when evaluating their capacity to comply with their obligations.
That is, the higher a nation’s EMBI, the more likely it is that it will not meet agreed payments. On the contrary, the lower the indicator, the greater trust creditors have.
In that sense, Uruguay placed first in minor risk country at the turn of the year, with an EMBI of 0.91%, according to data from JP Morgan Chase; well below the values of the other countries in the region.
The panorama in South America
In the region, Uruguay was in a comfortable first place in terms of reliability of the fulfillment of its obligations, since second place was occupied by Chili, with an EMBI of 1.38; that is, 0.47 points higher.
Peru came third, with an indicator of 1.71%; while fourth and fifth place was a tie between Brazil and Paraguay, with an EMBI of 1.99%.
For its part, Colombia divided the table between the countries with greater certainty and those with greater credit uncertainty with 3.04 in the calculation of the indicator. Among the worst countries risk figures were Argentina (19.84), Ecuador (20,18), Bolivia (21,33) and Venezuela (184.40).
Especially with regards to Argentina—with a recent revival of the agreement with the International Monetary Fund (IMF) which represents a disbursement of 4.7 billion dollars for the payment of interest with the same organization—and Ecuador—in the midst of a crisis and escalation of violence due to the fight against drug trafficking—it is possible that the country risk increases, in principle, in the short term.
Meanwhile, Uruguay It benefited in 2023 from the improvement of its credit rating by the three main agencies in the world: Fitch, Moody’s and Standard & Poor’s (S&P) —which described it as a country with a stable and positive outlook, depending on the case. This also contributed to reducing country risk and improving access to credit.
Source: Ambito
