I noted in a recent post that much of North­ern Europe cur­rently rep­re­sents a good value for long-term investors.

Not only are these coun­tries espe­cially cheap right now, but they gen­er­ally have bet­ter growth prospects than other devel­oped mar­kets and based on cur­rent credit default swap spreads, they are per­ceived as less risky than their south­ern neighbors.

Now, a new Black­Rock Invest­ment Insti­tute paper offers fur­ther evi­dence in sup­port of the case for the North­ern Europe. The paper, “Black­Rock Sov­er­eign Risk Index: Euro­zone Revis­ited & Notable Movers,” con­tains the Institute’s lat­est quar­terly update of its Sov­er­eign Risk Index scores, which mea­sure coun­tries’ sov­er­eign risk.

Accord­ing to the lat­est rank­ing, “fis­cally squeaky clean and eco­nom­i­cally robust” North­ern Euro­pean coun­tries are at the low-risk end of the spec­trum, while slower-growing South­ern Euro­pean coun­tries plagued with debt prob­lems dom­i­nate the higher-risk side of the index data.

It’s also worth point­ing out that the South­ern Euro­pean coun­tries tend to rank lower than most emerg­ing mar­kets, sup­port­ing my view that many emerg­ing mar­kets actu­ally appear to be pic­tures of fis­cal rec­ti­tude com­pared with much of the devel­oped world.

In fact, a num­ber of emerg­ing mar­kets moved up in the new quar­terly rank­ing. As shown above, for instance, China and Peru both jumped up three notches due to new eco­nomic data show­ing bet­ter fis­cal situations.

Source: The Black­Rock Invest­ment Institute

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