Last updated: January 5, 2026
This table summarizes the latest bond ratings and appropriate default spreads for different countries. While you can use these numbers as rough estimates of country risk premiums, you may want to modify the premia to reflect the additonal risk of equity markets.
I start the process by estimating an implied expected annual return on stocks for the S&P 500. That is model-agnostic and just an IRR that yields a present value of expected cash flows (dividends plus buybacks) from holding the stocks in the index that is equal to the leval of the index. While I used to just net out the US treasury bond rate to get to an ERP for the US, the Moody's downgrade for the US has created a wrinkle:
Riskfree rate in US dollars = US treasury bond rate minus Default spread for the US
ERP for US = Implied Expected return on the S&P 500
minus Riskfree rate in US dollars
Mature market ERP = ERP for US minus
Default spread for the US
To estimate the equity
risk premiums for other countries, I start with a default spread, for each country, which I obtain using the local currency sovereign rating (from Moody's: www.moodys.com)
and estimating the default spread for that rating (based upon traded
country bonds) over a default free government bond rate. For countries without a Moody's rating but with an S&P rating, I use the Moody's equivalent of the S&P rating. To get the default spreads by sovereign rating, I use the CDS spreads and compute the average CDS spread by rating. Using that number as a basis, I extrapolate for those ratings for which I have no CDS spreads.
You can add just this default spread to the mature market premium to arrive at the total equity risk premium, and that remains the standard practice.
I add an additional step. In the short term especially, the equity country risk premium
is likely to be greater than the country's default spread. You can
estimate an adjusted country risk premium by multiplying the default
spread by the relative equity market volatility for that market (Std
dev in country equity market/Std dev in country bond). Since government bonds are not available or traded in most countries, I approximate the relative equity market volatility by estimating the standard deviations in two indices, the S&P emerging market equity index (for equities) and an iShares emerging market government bond ETF (for government bonds), and using that ratio for all countries to estimate the additional country risk premium. Finally, I add that country risk premium to my estimate of a mature market equity risk premium.
For a subset of countries, you have an alternate measure of the default spread in the form of sovereign CDS spreads. I estimate equity risk premiums based upon these spreads in the downloadable spreadsheet linked below:
Excel file with full country risk premium data: https://www.stern.nyu.edu/~adamodar/pc/datasets/ctryprem.xlsx
If you are interested in my approach to computing the equity risk premium, download my magnum opus paper on country risk (updated every year):
| My paper on equity risk premiums: | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4398884 | ||||||||||
| My paper on country risk premiums: | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4509578 | ||||||||||
| Watch my lectures on country risk premiums: | https://www.youtube.com/watch?v=aIRPvY2SQ94 | ||||||||||
| https://www.youtube.com/watch?v=D3IGn6tH03c | |||||||||||
And my paper on measuring country risk
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4161010
| Country | Moody's rating | Adj. Default Spread | Country Risk Premium | Equity Risk Premium | Corporate Tax Rate | Sovereignn CDS | ERP based on sovereign CDSS |
| Abu Dhabi | Aa2 | 0.42% | 0.64% | 4.87% | 9.00% | 0.46% | 4.93% |
| Albania | Ba3 | 3.06% | 4.66% | 8.89% | 15.00% | NA | NA |
| Algeria | NR | 3.83% | 5.83% | 10.06% | 10.07% | NA | NA |
| Andorra (Principality of) | Baa1 | 1.36% | 2.07% | 6.30% | 10.00% | NA | NA |
| Angola | B3 | 5.52% | 8.41% | 12.64% | 25.00% | 6.10% | 13.50% |
| Argentina | Caa1 | 6.37% | 9.71% | 13.94% | 35.00% | NA | NA |
| Armenia | Ba3 | 3.06% | 4.66% | 8.89% | 18.00% | NA | NA |
| Aruba | Baa3 | 1.87% | 2.85% | 7.08% | 22.00% | NA | NA |
| Australia | Aaa | 0.00% | 0.00% | 4.23% | 30.00% | 0.05% | 4.31% |
| Austria | Aa1 | 0.23% | 0.36% | 4.59% | 23.00% | 0.14% | 4.44% |
| Azerbaijan | Baa3 | 1.87% | 2.85% | 7.08% | 20.00% | NA | NA |
| Bahamas | B1 | 3.83% | 5.83% | 10.06% | 0.00% | NA | NA |
| Bahrain | B2 | 4.67% | 7.12% | 11.35% | 0.00% | 2.33% | 7.77% |
| Bangladesh | B2 | 4.67% | 7.12% | 11.35% | 27.50% | NA | NA |
| Barbados | B2 | 4.67% | 7.12% | 11.35% | 9.00% | NA | NA |
| Belarus | C | 17.50% | 26.66% | 30.89% | 25.00% | NA | NA |
| Belgium | Aa3 | 0.51% | 0.78% | 5.01% | 25.00% | 0.26% | 4.63% |
| Belize | Caa1 | 6.37% | 9.71% | 13.94% | 0.00% | NA | NA |
| Benin | B1 | 3.83% | 5.83% | 10.06% | 30.00% | NA | NA |
| Bermuda | A2 | 0.72% | 1.10% | 5.33% | 0.00% | NA | NA |
| Bolivia | Ca | 10.20% | 15.54% | 19.77% | 25.00% | NA | NA |
| Bosnia and Herzegovina | B3 | 5.52% | 8.41% | 12.64% | 10.00% | NA | NA |
| Botswana | Baa1 | 1.36% | 2.07% | 6.30% | 22.00% | NA | NA |
| Brazil | Ba1 | 2.13% | 3.24% | 7.47% | 34.00% | 2.21% | 7.59% |
| Brunei | NR | 0.51% | 0.78% | 5.01% | 5.02% | NA | NA |
| Bulgaria | Baa1 | 1.36% | 2.07% | 6.30% | 10.00% | 0.63% | 5.19% |
| Burkina Faso | Caa1 | 6.37% | 9.71% | 13.94% | 27.50% | NA | NA |
| Cambodia | B2 | 4.67% | 7.12% | 11.35% | 20.00% | NA | NA |
| Cameroon | Caa1 | 6.37% | 9.71% | 13.94% | 33.00% | 6.73% | 14.46% |
| Canada | Aaa | 0.00% | 0.00% | 4.23% | 26.14% | 0.19% | 4.52% |
| Cape Verde | B2 | 4.67% | 7.12% | 11.35% | 26.86% | NA | NA |
| Cayman Islands | Aa3 | 0.51% | 0.78% | 5.01% | 0.00% | NA | NA |
| Chile | A2 | 0.72% | 1.10% | 5.33% | 27.00% | 0.73% | 5.34% |
| China | A1 | 0.60% | 0.91% | 5.14% | 25.00% | 0.50% | 4.99% |
| Colombia | Baa3 | 1.87% | 2.85% | 7.08% | 35.00% | 3.20% | 9.09% |
| Congo (Democratic Republic of) | B3 | 5.52% | 8.41% | 12.64% | 30.00% | NA | NA |
| Congo (Republic of) | Caa2 | 7.65% | 11.66% | 15.89% | 26.86% | NA | NA |
| Cook Islands | B1 | 3.83% | 5.83% | 10.06% | 20.00% | NA | NA |
| Costa Rica | Ba2 | 2.56% | 3.90% | 8.13% | 30.00% | 1.61% | 6.68% |
| Côte d'Ivoire | Ba2 | 2.56% | 3.90% | 8.13% | 25.00% | NA | NA |
| Croatia | A3 | 1.02% | 1.55% | 5.78% | 18.00% | 0.88% | 5.57% |
| Cuba | Ca | 10.20% | 15.54% | 19.77% | 35.00% | NA | NA |
| Curacao | Baa3 | 1.87% | 2.85% | 7.08% | 22.00% | NA | NA |
| Cyprus | A3 | 1.02% | 1.55% | 5.78% | 12.50% | 0.61% | 5.16% |
| Czech Republic | Aa3 | 0.51% | 0.78% | 5.01% | 21.00% | 0.34% | 4.75% |
| Denmark | Aaa | 0.00% | 0.00% | 4.23% | 22.00% | 0.04% | 4.29% |
| Dominican Republic | Ba2 | 2.56% | 3.90% | 8.13% | 27.00% | NA | NA |
| Ecuador | Caa3 | 8.50% | 12.95% | 17.18% | 25.00% | 5.53% | 12.64% |
| Egypt | Caa1 | 6.37% | 9.71% | 13.94% | 22.50% | 3.41% | 9.41% |
| El Salvador | B3 | 5.52% | 8.41% | 12.64% | 30.00% | 3.26% | 9.19% |
| Estonia | A1 | 0.60% | 0.91% | 5.14% | 20.00% | 0.86% | 5.54% |
| Ethiopia | Caa2 | 7.65% | 11.66% | 15.89% | 30.00% | NA | NA |
| Fiji | B1 | 3.83% | 5.83% | 10.06% | 25.00% | NA | NA |
| Finland | Aa1 | 0.23% | 0.36% | 4.59% | 20.00% | 0.12% | 4.41% |
| France | Aa3 | 0.51% | 0.78% | 5.01% | 25.83% | 0.50% | 4.99% |
| Gabon | Caa2 | 7.65% | 11.66% | 15.89% | 30.00% | NA | NA |
| Gambia | NR | 4.67% | 7.12% | 11.35% | 11.36% | NA | NA |
| Georgia | Ba2 | 2.56% | 3.90% | 8.13% | 15.00% | NA | NA |
| Germany | Aaa | 0.00% | 0.00% | 4.23% | 29.93% | 0.07% | 4.34% |
| Ghana | Caa1 | 6.37% | 9.71% | 13.94% | 25.00% | NA | NA |
| Greece | Baa3 | 1.87% | 2.85% | 7.08% | 22.00% | 0.61% | 5.16% |
| Guatemala | Ba1 | 2.13% | 3.24% | 7.47% | 25.00% | NA | NA |
| Guernsey (States of) | A1 | 0.60% | 0.91% | 5.14% | 0.00% | NA | NA |
| Guinea | NR | 7.65% | 11.66% | 15.89% | 15.90% | NA | NA |
| Guinea-Bissau | NR | 6.37% | 9.71% | 13.94% | 13.95% | NA | NA |
| Guyana | NR | 1.36% | 2.07% | 6.30% | 6.31% | NA | NA |
| Haiti | NR | 8.50% | 12.95% | 17.18% | 17.19% | NA | NA |
| Honduras | B1 | 3.83% | 5.83% | 10.06% | 30.00% | NA | NA |
| Hong Kong | Aa3 | 0.51% | 0.78% | 5.01% | 16.50% | 0.30% | 4.69% |
| Hungary | Baa2 | 1.62% | 2.46% | 6.69% | 9.00% | 1.46% | 6.45% |
| Iceland | A1 | 0.60% | 0.91% | 5.14% | 21.00% | 0.31% | 4.70% |
| India | Baa3 | 1.87% | 2.85% | 7.08% | 30.00% | 0.66% | 5.23% |
| Indonesia | Baa2 | 1.62% | 2.46% | 6.69% | 22.00% | 1.05% | 5.83% |
| Iran | NR | 6.37% | 9.71% | 13.94% | 13.95% | NA | NA |
| Iraq | Caa1 | 6.37% | 9.71% | 13.94% | 15.00% | 2.75% | 8.41% |
| Ireland | Aa3 | 0.51% | 0.78% | 5.01% | 12.50% | 0.20% | 4.53% |
| Isle of Man | Aa3 | 0.51% | 0.78% | 5.01% | 0.00% | NA | NA |
| Israel | Baa1 | 1.36% | 2.07% | 6.30% | 23.00% | 0.99% | 5.73% |
| Italy | Baa2 | 1.62% | 2.46% | 6.69% | 27.81% | 0.47% | 4.94% |
| Jamaica | Ba3 | 3.06% | 4.66% | 8.89% | 25.00% | NA | NA |
| Japan | A1 | 0.60% | 0.91% | 5.14% | 29.74% | 0.30% | 4.69% |
| Jersey (States of) | Aa3 | 0.51% | 0.78% | 5.01% | 0.00% | NA | NA |
| Jordan | Ba3 | 3.06% | 4.66% | 8.89% | 20.00% | NA | NA |
| Kazakhstan | Baa1 | 1.36% | 2.07% | 6.30% | 20.00% | 1.17% | 6.01% |
| Kenya | Caa1 | 6.37% | 9.71% | 13.94% | 30.00% | 4.37% | 10.87% |
| Korea | Aa2 | 0.42% | 0.64% | 4.87% | 26.40% | 0.20% | 4.53% |
| Korea, D.P.R. | NR | 10.20% | 15.54% | 19.77% | 19.78% | NA | NA |
| Kuwait | A1 | 0.60% | 0.91% | 5.14% | 15.00% | 0.73% | 5.34% |
| Kyrgyzstan | B3 | 5.52% | 8.41% | 12.64% | 10.00% | NA | NA |
| Laos | Caa2 | 7.65% | 11.66% | 15.89% | 20.00% | NA | NA |
| Latvia | A3 | 1.02% | 1.55% | 5.78% | 20.00% | 0.68% | 5.26% |
| Lebanon | C | 17.50% | 26.66% | 30.89% | 17.00% | NA | NA |
| Liberia | NR | 7.65% | 11.66% | 15.89% | 15.90% | NA | NA |
| Libya | NR | 2.56% | 3.90% | 8.13% | 8.14% | NA | NA |
| Liechtenstein | Aaa | 0.00% | 0.00% | 4.23% | 12.50% | NA | NA |
| Lithuania | A2 | 0.72% | 1.10% | 5.33% | 15.00% | 0.68% | 5.26% |
| Luxembourg | Aaa | 0.00% | 0.00% | 4.23% | 24.94% | NA | NA |
| Macao | Aa3 | 0.51% | 0.78% | 5.01% | 25.00% | NA | NA |
| Macedonia | Ba3 | 3.06% | 4.66% | 8.89% | 10.00% | NA | NA |
| Madagascar | NR | 5.52% | 8.41% | 12.64% | 12.65% | NA | NA |
| Malawi | NR | 8.50% | 12.95% | 17.18% | 17.19% | NA | NA |
| Malaysia | A3 | 1.02% | 1.55% | 5.78% | 24.00% | 0.53% | 5.04% |
| Maldives | Caa2 | 7.65% | 11.66% | 15.89% | 15.00% | NA | NA |
| Mali | Caa2 | 7.65% | 11.66% | 15.89% | 30.00% | NA | NA |
| Malta | A2 | 0.72% | 1.10% | 5.33% | 35.00% | NA | NA |
| Mauritius | Baa3 | 1.87% | 2.85% | 7.08% | 15.00% | NA | NA |
| Mexico | Baa2 | 1.62% | 2.46% | 6.69% | 30.00% | 1.52% | 6.54% |
| Moldova | B3 | 5.52% | 8.41% | 12.64% | 12.00% | NA | NA |
| Mongolia | B1 | 3.83% | 5.83% | 10.06% | 25.00% | NA | NA |
| Montenegro | B1 | 3.83% | 5.83% | 10.06% | 15.00% | NA | NA |
| Montserrat | Baa3 | 1.87% | 2.85% | 7.08% | 30.00% | NA | NA |
| Morocco | Ba1 | 2.13% | 3.24% | 7.47% | 33.00% | 1.16% | 5.99% |
| Mozambique | Caa3 | 8.50% | 12.95% | 17.18% | 32.00% | NA | NA |
| Myanmar | NR | 10.20% | 15.54% | 19.77% | 19.78% | NA | NA |
| Namibia | B1 | 3.83% | 5.83% | 10.06% | 32.00% | NA | NA |
| Nepal | Ba3 | 3.06% | 4.66% | 8.89% | 25.00% | NA | NA |
| Netherlands | Aaa | 0.00% | 0.00% | 4.23% | 25.80% | 0.06% | 4.32% |
| New Zealand | Aaa | 0.00% | 0.00% | 4.23% | 28.00% | 0.09% | 4.37% |
| Nicaragua | B2 | 4.67% | 7.12% | 11.35% | 30.00% | 5.15% | 12.06% |
| Niger | Caa3 | 8.50% | 12.95% | 17.18% | 30.00% | NA | NA |
| Nigeria | B3 | 5.52% | 8.41% | 12.64% | 30.00% | 3.77% | 9.96% |
| Norway | Aaa | 0.00% | 0.00% | 4.23% | 22.00% | 0.04% | 4.29% |
| Oman | Baa3 | 1.87% | 2.85% | 7.08% | 15.00% | 1.16% | 5.99% |
| Pakistan | Caa1 | 6.37% | 9.71% | 13.94% | 29.00% | 5.09% | 11.97% |
| Panama | Baa3 | 1.87% | 2.85% | 7.08% | 25.00% | 2.08% | 7.39% |
| Papua New Guinea | B2 | 4.67% | 7.12% | 11.35% | 30.00% | NA | NA |
| Paraguay | Baa3 | 1.87% | 2.85% | 7.08% | 10.00% | NA | NA |
| Peru | Baa1 | 1.36% | 2.07% | 6.30% | 29.50% | 1.12% | 5.93% |
| Philippines | Baa2 | 1.62% | 2.46% | 6.69% | 25.00% | 0.88% | 5.57% |
| Poland | A2 | 0.72% | 1.10% | 5.33% | 19.00% | 0.86% | 5.54% |
| Portugal | A3 | 1.02% | 1.55% | 5.78% | 31.50% | 0.31% | 4.70% |
| Qatar | Aa2 | 0.42% | 0.64% | 4.87% | 10.00% | 0.47% | 4.94% |
| Ras Al Khaimah (Emirate of) | A3 | 1.02% | 1.55% | 5.78% | 18.94% | NA | NA |
| Romania | Baa3 | 1.87% | 2.85% | 7.08% | 16.00% | 1.97% | 7.22% |
| Russia | NR | 2.56% | 3.90% | 8.13% | 8.14% | NA | NA |
| Rwanda | B2 | 4.67% | 7.12% | 11.35% | 28.00% | 3.89% | 10.14% |
| Saudi Arabia | Aa3 | 0.51% | 0.78% | 5.01% | 20.00% | 0.98% | 5.72% |
| Senegal | Caa1 | 6.37% | 9.71% | 13.94% | 30.00% | 9.79% | 19.11% |
| Serbia | Ba2 | 2.56% | 3.90% | 8.13% | 15.00% | 1.82% | 7.00% |
| Sharjah | Ba1 | 2.13% | 3.24% | 7.47% | 18.94% | NA | NA |
| Sierra Leone | NR | 5.52% | 8.41% | 12.64% | 12.65% | NA | NA |
| Singapore | Aaa | 0.00% | 0.00% | 4.23% | 17.00% | NA | NA |
| Slovakia | A3 | 1.02% | 1.55% | 5.78% | 21.00% | 0.43% | 4.88% |
| Slovenia | A3 | 1.02% | 1.55% | 5.78% | 22.00% | 0.53% | 5.04% |
| Solomon Islands | Caa1 | 6.37% | 9.71% | 13.94% | 30.00% | NA | NA |
| Somalia | NR | 8.50% | 12.95% | 17.18% | 17.19% | NA | NA |
| South Africa | Ba2 | 2.56% | 3.90% | 8.13% | 27.00% | 2.26% | 7.67% |
| Spain | A3 | 1.02% | 1.55% | 5.78% | 25.00% | 0.31% | 4.70% |
| Sri Lanka | Ca | 10.20% | 15.54% | 19.77% | 30.00% | NA | NA |
| St. Maarten | Ba2 | 2.56% | 3.90% | 8.13% | 20.00% | NA | NA |
| St. Vincent & the Grenadines | B3 | 5.52% | 8.41% | 12.64% | 28.00% | NA | NA |
| Sudan | NR | 17.50% | 26.66% | 30.89% | 30.90% | NA | NA |
| Suriname | Caa1 | 6.37% | 9.71% | 13.94% | 36.00% | NA | NA |
| Swaziland | B2 | 4.67% | 7.12% | 11.35% | 25.00% | NA | NA |
| Sweden | Aaa | 0.00% | 0.00% | 4.23% | 20.60% | 0.06% | 4.32% |
| Switzerland | Aaa | 0.00% | 0.00% | 4.23% | 19.61% | 0.00% | 4.23% |
| Syria | NR | 10.20% | 15.54% | 19.77% | 19.78% | NA | NA |
| Taiwan | Aa3 | 0.51% | 0.78% | 5.01% | 20.00% | NA | NA |
| Tajikistan | B3 | 5.52% | 8.41% | 12.64% | 18.00% | NA | NA |
| Tanzania | B1 | 3.83% | 5.83% | 10.06% | 30.00% | NA | NA |
| Thailand | Baa1 | 1.36% | 2.07% | 6.30% | 20.00% | 0.52% | 5.02% |
| Togo | B3 | 5.52% | 8.41% | 12.64% | 27.00% | NA | NA |
| Trinidad and Tobago | Ba2 | 2.56% | 3.90% | 8.13% | 30.00% | NA | NA |
| Tunisia | Caa1 | 6.37% | 9.71% | 13.94% | 15.00% | 6.87% | 14.67% |
| Turkey | B1 | 3.83% | 5.83% | 10.06% | 25.00% | 2.85% | 8.56% |
| Turks and Caicos Islands | Baa1 | 1.36% | 2.07% | 6.30% | 0.00% | NA | NA |
| Uganda | B3 | 5.52% | 8.41% | 12.64% | 30.00% | NA | NA |
| Ukraine | Ca | 10.20% | 15.54% | 19.77% | 18.00% | NA | NA |
| United Arab Emirates | Aa2 | 0.42% | 0.64% | 4.87% | 9.00% | NA | NA |
| United Kingdom | Aa3 | 0.51% | 0.78% | 5.01% | 25.00% | 0.23% | 4.58% |
| United States | Aa1 | 0.23% | 0.23% | 4.46% | 25.00% | 0.30% | 4.69% |
| Uruguay | Baa1 | 1.36% | 2.07% | 6.30% | 25.00% | 0.63% | 5.19% |
| Uzbekistan | Ba3 | 3.06% | 4.66% | 8.89% | 15.00% | NA | NA |
| Venezuela | C | 17.50% | 26.66% | 30.89% | 34.00% | 9.15% | 18.14% |
| Vietnam | Ba2 | 2.56% | 3.90% | 8.13% | 20.00% | 1.37% | 6.31% |
| Yemen, Republic | NR | 10.20% | 15.54% | 19.77% | 19.78% | NA | NA |
| Zambia | Caa2 | 7.65% | 11.66% | 15.89% | 30.00% | 3.94% | 10.22% |
| Zimbabwe | NR | 7.65% | 11.66% | 15.89% | 15.90% | NA | NA |
Last updated: January 2026
Aswath Damodaran