Country Risk in Latin America in 2025: Where It Fell the Most
Quick overview
- In 2025, political developments significantly influenced the country-risk indicator compiled by JPMorgan Chase across Latin America.
- Ecuador experienced the largest decline in country risk, dropping below 500 basis points for the first time in six years after President Daniel Noboa's re-election.
- Bolivia's country risk fell to 955 points following the election of Rodrigo Paz, marking its first close below 1,000 since August 2023.
- Venezuela ended the year with the highest country-risk level in the world at over 12,000 points, despite a steady decline in its risk premium.
The country-risk indicator compiled by JPMorgan Chase was heavily influenced by political developments across the region in 2025.
Throughout the year, bonds issued by higher-risk Latin American countries saw a meaningful compression in yields, reflecting improved investor sentiment and shifting political expectations.
Ecuador recorded the sharpest decline in country risk in the region. The indicator fell to levels not seen since mid-2019, breaking below 500 basis points for the first time in six years. The move followed the re-election of President Daniel Noboa, who defeated left-wing candidate Luisa González. The improvement came after significant volatility: on April 10, Ecuador’s country risk had spiked to 1,908 points.
In Bolivia, the presidential election that brought Rodrigo Paz to power—ending two decades of socialist rule—triggered a more favorable financial backdrop. On November 7, Bolivia’s country risk fell to 955 points, its first close below 1,000 since August 2023. It currently trades near 700 points.
In Argentina, the JPMorgan-compiled indicator stands at 574 points. After rising in late October, country risk declined following the legislative election victory of the libertarian coalition, allowing spreads to compress. Argentina reached a peak of 1,456 points in September after a key electoral setback, though its most significant risk compression occurred in 2024.
A special case is Venezuela, which will end the year above 12,000 points, the highest country-risk level in the world. Even so, its risk premium declined steadily throughout 2025, a move analysts attribute to investor speculation about a potential political regime change.
At the lower-risk end of the spectrum, Uruguay, Chile, Peru, and Paraguay remain the safest sovereign credits in Latin America. Brazil and Mexico occupy a middle tier, above 200 basis points, but both saw their bond spreads tighten during 2025.
Country Risk Levels in Latin America (End-2025, basis points)
- Venezuela: 12,645
- Bolivia: 709
- Argentina: 574
- Ecuador: 502
- El Salvador: 328
- Colombia: 266
- Honduras: 237
- Mexico: 224
- Brazil: 198
- Dominican Republic: 171
- Panama: 156
- Costa Rica: 143
- Guatemala: 142
- Peru: 132
- Paraguay: 103
- Chile: 91
- Uruguay: 70
What Is Country Risk?
Country risk is measured using the Emerging Markets Bond Index (EMBI), produced by JPMorgan Chase. It reflects market perceptions of a country’s ability to meet its sovereign debt obligations by measuring the additional yield investors demand over U.S. Treasury bonds.
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