He Risk country of Uruguay continues at its lowest historical levels after the Minister of Economy and Finance (MEF), Azucena Arbeleche, confirmed yesterday in the annual presentation of the economic and fiscal results that the government complied for the fourth consecutive year with the Fiscal Rule.
One of the points highlighted by the head of the economic portfolio during her annual reporting was that the sovereign spread, also commonly called Risk country, It is at its historical minimum thanks to, according to the government, the orderly fiscal management that the current administration led by the president has been carrying out. Luis Lacalle Pou.
In that sense, and after the presentation of the 2023 fiscal balance and the projections made by the MEF for 2024, the different indicators that measure the spread of Uruguay recorded slight additional declines, in line with the update of the macrofiscal estimates.
In this regard, the Uruguay Bond Index (UBI) of AFAP Republic measured at 80 basis points at the close of trading yesterday, when the previous day it had closed at 82 bp. This indicator is calculated daily and reflects the average spread, that is, the difference between the yield of Uruguayan bonds and the yield of Treasury bonds. United States (treasuries).
The lowest level of the UBI so far this year was recorded on January 2, when it hit the floor of 75 basis points.
For his part, the Uruguay Risk Index of the Electronic Stock Exchange (Irubevsa), which also measures the spread or difference between the performance of the Uruguayan bonds and the Americans, fell from 83 basis points to 78 bp after the presentation of the 2023 fiscal result and the forecasts for this year. The floor of this indicator so far in 2024 was 76 bp on February 16.
Also, the Emerging Market Bond Indicator (EMBI, for its acronym in English) of JP Morgan it was placed at 85 basis points; Meanwhile he Credit Default Swap (CDS) five years it was 63 basis points.
The lowest spread in history
The credit situation of Uruguay was one of the highlights in Arbeleche’s presentation, which pointed out that compliance with the three pillars of the Fiscal Rule for the fourth consecutive year led to the country having the credit rating highest in history and, in parallel, the spread at historically low levels.
This is important since it improves the conditions of access to external financing of the country, as well as the interests that the State must pay for the external debt; as it represents the level of “confidence” of the markets in the nation’s payment capacity.
In that sense, during 2023 also Uruguay has been consolidated with the minor spread sovereign in the region, according to the data presented by the head of the MEF.
This trend can be seen in the economic portfolio graph, which shows that Uruguay It begins to separate itself from other Latin American countries around October 2021, still with some ups and downs. However, at the end of 2022 the greatest difference and the definitive decline to current levels -solidly below 100 basis points- will occur; a process that is in line with the improvement of credit note by the main rating agencies in the world.
Source: Ambito
