Key Points
— Latin America’s average EMBI spread closed Q1 2026 at 308 basis points — completely flat from end-2025 — while the global emerging markets index rose 30 points to 261, driven by Iran-related risk aversion
— Venezuela’s EMBI fell roughly 50% (from ~12,741 to 6,371) after the US captured Maduro in January, though its bonds remain in default and the spread is still the highest in the world
— Uruguay (78 bps) and Chile (102 bps) remain the safest sovereigns in the region — while Argentina’s spread rose 55 points to 616, and El Salvador and Dominican Republic both saw notable increases
The Iran conflict pushed global risk premiums higher — but Latin America, with its commodity buffers and limited direct exposure, stayed remarkably calm. The exceptions tell their own stories.
LATAM country risk, as measured by JPMorgan’s Emerging Markets Bond Index (EMBI), showed a region moving in starkly different directions during the first three months of 2026. The regional average finished Q1 at exactly 308 basis points — unchanged from where it ended 2025. But that headline figure masks dramatic divergence at the country level, with only three nations (Venezuela, Bolivia, and Honduras) recording lower spreads than where they started the year.
The Full Q1 Scoreboard
The complete EMBI readings at end-March 2026, ranked from lowest to highest risk, with the Q1 change from end-2025 in parentheses: Uruguay 78 (+10), Chile 102 (+13), Paraguay 129 (+28), Peru 139 (+4), Guatemala 155 (+14), Panama 159 (+4), Costa Rica 165 (+24), Brazil 197 (+1), Dominican Republic 221 (+52), Honduras 222 (−12), Mexico 233 (+11), Colombia 282 (+7), El Salvador 385 (+59), Ecuador 506 (+14), Bolivia 561 (−112), Argentina 616 (+55), and Venezuela 6,371 (−6,370). Only three countries — Venezuela, Bolivia, and Honduras — ended Q1 with a lower spread than where they started the year.
Venezuela: Still the Riskiest, But Hope Repriced
The largest move in the region was Venezuela’s spread compression — a roughly 50% decline from its end-2025 level. The driver was entirely political: the US military capture of Nicolás Maduro on January 3 sparked hopes of regime change, economic opening, and an eventual path out of the default that has persisted since 2017. Interim President Delcy Rodríguez has since signed an oil investment law and had her personal sanctions lifted. But at 6,371 basis points, Venezuelan bonds still price in extreme distress — investors are betting on a possible recovery, not a certain one.
Argentina: The Reversal Risk
Argentina’s 55-point spread increase to 616 is notable because it reverses the steady tightening that characterized Milei’s first year. The Argentine economy grew in 2025 and inflation fell sharply, but Q1 2026 brought new risks: the Iran conflict’s impact on energy prices, the upcoming 2027 election cycle beginning to weigh on political risk, and persistent questions about whether the exchange rate regime can hold. At 616, Argentina’s spread remains well below the 1,900+ levels of early 2024, but the direction has shifted.
The Safe End: Uruguay, Chile, Paraguay
Uruguay at 78 basis points and Chile at 102 continue to anchor the safe end of the regional spectrum. Paraguay at 129 has been converging rapidly since obtaining investment-grade status and now trades tighter than Peru (139) on some days — a remarkable trajectory for a country that was largely invisible to international bond markets a decade ago. Peru itself remains attractively priced despite chronic political instability, a testament to its fiscal discipline and mining-driven export base.
The Biggest Movers to Watch
Two countries stand out for unexpected Q1 moves. El Salvador widened 59 points to 385 — a reversal after strong 2024-2025 performance — suggesting markets are reassessing the sustainability of the Bukele fiscal model. The Dominican Republic jumped 52 points to 221, a move that may reflect concern about energy import costs given the country’s heavy reliance on LNG, which has surged on the Iran-Hormuz disruption.
Bolivia’s 112-point improvement to 561 reflects the new government’s fiscal reform package — including the elimination of the ITF dollar tax, 30% spending cuts, and $9 billion in external financing negotiations. At 561, Bolivia remains firmly in distressed territory, but the trajectory is improving. Brazil, at 197, barely moved — a sign that the market is neither panicking about the Master scandal nor pricing in material fiscal deterioration. Mexico at 233 edged higher on tariff uncertainty and weaker GDP data, but the move was modest. For a region navigating an oil shock, a Middle Eastern war, and shifting US trade policy, LATAM’s flat Q1 is arguably the most notable data point of all.