Country risk goes up 1,500 points

Image: Expreso

Each time the Country risk rises it means that for Ecuador, as a country, it will be more expensive to acquire debt with foreign creditors.

The almost free falling oil prices, have much to do. It’s like the parent who loses his income or loses his monthly income: the bank will raise the interest or even worse: it will restrict credit, because of the risk it represents. Something like this happens in Ecuador. The markets continue taking in the evolution of oil prices as one of the parameters for measuring the risk Ecuador would mean in their investments.

So, if oil prices drop, investors argue that the State has less revenues to pay its debts, since this reduces its ability to pay. And that is why, they “penalize” the country with a higher interest rate. This is reflected in the country risk indicator, which jumped up and now stands at 1,500 points, until last Monday: 300 points more than a month ago.

Source: http://expreso.ec/expreso/plantillas/nota.aspx?idart=8812126&idcat=38229&tipo=2