San Salvador, El Salvador Capital City.
El Salvador has reached its lowest country risk level in nearly seven years, marking a significant shift for a nation once ranked among the riskiest borrowers in global markets.
The country’s risk indicator, measured through the Emerging Markets Bond Index (EMBI) compiled by J.P. Morgan, closed at 3.48 points in October 2025—its lowest level since January 2018.
The rate is 1.75 points lower than the 5.23 points recorded at the end of October 2024, reflecting a notable improvement in investor perception.
The EMBI tracks the extra yield investors require to purchase sovereign debt from emerging markets instead of U.S. Treasury bonds. A higher figure signals higher financing costs for a nation.
The index serves as a benchmark for debt issuance, helping to monitor shifts in a country’s solvency, liquidity, and overall market confidence.
Despite the decline, El Salvador still holds the fifth-highest EMBI score in Latin America. It remains the highest in Central America, surpassing Honduras, Costa Rica, Panama, and Guatemala.
Regional averages have also fallen. Latin America posted 4.36 points in October, while the year-to-date average stands at 3.18 points, indicating a broader easing of market risk levels.
El Salvador’s progress followed a dramatic spike in July 2022, when its EMBI reached 35 points amid concerns over debt and global skepticism regarding its Bitcoin policy and fiscal management.
The figure dropped to 6.84 points by the end of 2023, and authorities closed 2024 at 3.88 points, confirming a two-year downward trend fueled by debt repurchases and stronger market signals.
Country risk is a key measure that reflects how financial markets perceive a nation’s ability to repay its external debt, according to the J.P. Morgan Chase EMBI+ index.
Expressed in basis points, the indicator has become a global benchmark for investors evaluating whether to allocate capital to emerging economies with varying levels of risk.
For El Salvador, understanding country risk is essential for foreign businesses and investors, as it directly influences borrowing costs, access to financing, and overall confidence in the nation’s economic stability.
