LatAm country risk update

Here's an update post on the state of play in the JP Morgan Chase EMBI+ index, normally known as "country risk" and a measure of just how much a country has to pay to get some debt in that crazy world bonds market.

Let's go straight for the jugular and look at the local "exotics" of Venezuela, Ecuador and Argentina.

Up to recently the jury has been out on which banana was the biggest banana, but the game is over. Ecuador is crowned champion of the world in silly prices for debt, peaking at 3150 basis points (even though it faded to "only" 2,945 on Friday). Argentina at 1,711bp and Venezuela at 1,479bp make up the trio of craziness. Really, once the EMBI+ gets past a thousand or so it loses its meaning, so even though there seems to be a big difference between Ecuador and Venezuela in practical terms they're still the same.

And now for the (relatively) serious countries of Brazil, Mexico, Colombia and Peru.

Not so good for these guys, either. The difference between a place like Peru (441bp) and previously mentioned Argentina might look good for Peru, but on the other hand Argentina has no intention to go to the world debt market right now (it's too busy dipping its fingers into the big box of pensions). And the other thing is that, once again, all the serious bonds may as well be one country...they act the same and look the same and price the same.

Frankly I can't think of a single reason to hold Mexico debt (390bp) and not hold Colombia debt (540bp) cos it's clear that if the worst happens they'll default within minutes of each other. So why not claim the extra 1.5% in the meantime?