The Emerging Markets Bond Index (EMBI), commonly known as "riesgo paĆs" in Spanish speaking countries, is a weighted financial benchmark that measures the interest rates paid each day by a selected portfolio of government bonds from emerging countries. It is measured in base points, which reflect the difference between the return rates paid by emerging countries' government bonds and those offered by U.S. Treasury bills. This difference is defined as "spread".
Which Latin American country has the highest risk bonds?
As of September 26, 2023, Venezuela was the Latin American country with the greatest financial risk and highest expected returns of government bonds, with an EMBI spread of around 379 percent. This means that the annual interest rates paid by Venezuela's sovereign debt titles were estimated to be exponentially higher than those offered by the U.S. Treasury. On the other hand, Brazil's EMBI reached 207 index points at the end of August 2023. In 2023, Venezuela also had the highest average EMBI in Latin America, exceeding 40,000 base points.
The impact of COVID-19 on emerging market bonds
The economic crisis spawned by the coronavirus pandemic heavily affected the financial market's estimated risks of emerging governmental bonds. For instance, as of June 30, 2020, Argentina's EMBI spread had increased more than four percentage points in comparison to January 30, 2020. All the Latin American economies measured saw a significant increase of the EMBI spread in the first half of the year.
Emerging Markets Bond Index (EMBI) spread in selected Latin American countries in 2023
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Central Bank of the Dominican Republic. (September 28, 2023). Emerging Markets Bond Index (EMBI) spread in selected Latin American countries in 2023 [Graph]. In Statista. Retrieved June 18, 2024, from https://www.statista.com/statistics/1086634/emerging-markets-bond-index-spread-latin-america-country/
Central Bank of the Dominican Republic. "Emerging Markets Bond Index (EMBI) spread in selected Latin American countries in 2023." Chart. September 28, 2023. Statista. Accessed June 18, 2024. https://www.statista.com/statistics/1086634/emerging-markets-bond-index-spread-latin-america-country/
Central Bank of the Dominican Republic. (2023). Emerging Markets Bond Index (EMBI) spread in selected Latin American countries in 2023. Statista. Statista Inc.. Accessed: June 18, 2024. https://www.statista.com/statistics/1086634/emerging-markets-bond-index-spread-latin-america-country/
Central Bank of the Dominican Republic. "Emerging Markets Bond Index (Embi) Spread in Selected Latin American Countries in 2023." Statista, Statista Inc., 28 Sep 2023, https://www.statista.com/statistics/1086634/emerging-markets-bond-index-spread-latin-america-country/
Central Bank of the Dominican Republic, Emerging Markets Bond Index (EMBI) spread in selected Latin American countries in 2023 Statista, https://www.statista.com/statistics/1086634/emerging-markets-bond-index-spread-latin-america-country/ (last visited June 18, 2024)
Emerging Markets Bond Index (EMBI) spread in selected Latin American countries in 2023 [Graph], Central Bank of the Dominican Republic, September 28, 2023. [Online]. Available: https://www.statista.com/statistics/1086634/emerging-markets-bond-index-spread-latin-america-country/