Country Risk and Investment Grade - Peru

Country Risk and Investment Grade - PeruCountry Risk and Investment Grade - Peru
Peruvian Sovereign Credit Rating

Peru has been given good forecasts by the best-known risk rating agencies, which have not only ratified the country's investment grade but have also raised the Peruvian sovereign credit rating. The factors backing these ratings are the solid economic prospects reflected in a GDP growth of 5.3% for 2013, and an estimated 6.0% for 2014. These economic forecasts are backed by the rapid growth in investment and the significant drop in fiscal and external vulnerabilities, all within the context of several sources of growth, with low inflation and strong macroeconomic fundamentals.

Peru's Investment Grade Ratings (comparison Latin America)

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WR: Withdrawn Rating

Rating Symbols Explanation

The credit rating is a financial indicator to potential investors. These are assigned by credit rating agencies such as Moody's, Standard & Poor's.

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Fitch Ratings to have letter designations (such as AAA, B, CC) which represent the quality of a bond. Moody's assigns bond credit ratings of Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, with WR and NR as withdrawn and not rated. Standard & Poor's and Fitch assign bond credit ratings of AAA, AA, A, BBB, BB, B, CCC, CC, C, D.

Development of the Long-Term Debt Rating

Steady improvement of the investment grade has permitted Peru to attract international attention. More and more multinational corporations are looking at Peru with great interest. The subsequent investments will predictably further improve the positive development in the country.

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1/ The Rating was upgraded November 2011

Country Risk Indicator

As of December 31, 2013, Peru had a country risk of 162 base points, ranking second-lowest in Latin America. This score is less than half of the regional average (393 points).

Peru has recently achieved the position of the third most globalized country in Latin America, according to the Globalization Index established by EY. Five elements are considered within this index: openness to foreign trade, capital flows, exchange of technology and ideas, international movement of workers, and cultural integration. Additionally, in early February 2012 Bloomberg Markets positioned Peru as the third emerging market with the greatest international projection in 2012, based on the country's advantages, such as low share prices and their possible increase in the future.

Inflation Rates in Latin America

Peru's level of inflation is one of the lowest in Latin America, with a rate of 2.86% in 2013, and an estimated range of 1.5% to 2.5% for 2014. In addition, over the past decade, the Peruvian economy had the lowest average annual inflation rate in Latin America at 2.9%, below that of Chile (3.2%), Colombia (4.9%) and Brazil (6.4%). During the same period, it had one of the highest GDP growth rates at 5.6%, above Argentina (5.4%), Ecuador (4.6%), Colombia (4.5%), Chile (4.4%), Uruguay (4.0%), Brazil (3.5%), and Mexico (2.3%).

Sources

  • Standard & Poor's / Fitch Ratings / Moody's
  • Bloomberg
  • Apoyo
  • Central Reserve Bank of Peru (BCRP)
  • EY - Peru

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