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Montevideo, November 13th 2018 - 22:24 UTC

US hedge fund threatens to sue Peru on defaulted bonds from 1980s

Wednesday, October 14th 2015 - 11:40 UTC
Full article 2 comments
Peru  defaulted on $5.1bn in bonds in the 1980s. Gramercy has threatened to bring a claim under a tribunal system established in a US-Peruvian trade deal. Peru defaulted on $5.1bn in bonds in the 1980s. Gramercy has threatened to bring a claim under a tribunal system established in a US-Peruvian trade deal.

A US hedge fund has threatened to sue Peru over bonds issued by the country's former military regime. Connecticut-based hedge fund Gramercy purchased the defaulted debt at a discount in 2008 after other bondholders failed to reach a deal.

 Peru's finance minister said the government would oppose any legal action outside its borders. Purchasing defaulted bonds on the cheap to make a profit in a settlement is a common hedge fund tactic.

Peru defaulted on the $5.1bn in bonds in the 1980s. Gramercy has threatened to bring a claim against Peru under a tribunal system established in a US-Peruvian trade deal.

This type of action has been called “predatory” by groups in favor of sovereign debt relief plans.

Argentina has been engaged in a prolonged court battle with hedge funds over bonds it defaulted on in 2005.

Last week Peru played host to meetings of the World Bank and International Monetary Fund (IMF). Among the topics discussed was how to help country's restructure debt after a default to avoid drawn-out court battle.

Categories: Economy, Latin America.

Top Comments

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  • Pugol-H

    Here we go again, from the 1980s this time. But then more modern bonds don’t allow this, so they can only go further back.

    Someone should shoot these fu*kers, put them out of their misery and give the world a break, more particularly the parts of the world that need it.

    No one needs these bottom feeders, they have never done anything to enhance the human condition only detract from it.

    Time to lose them.

    Oct 14th, 2015 - 03:56 pm 0
  • Heisenbergcontext

    These bonds actually date back to the '60's and were intended to be compensation for land seizures. The debt was issued under Peruvian law, and the subsequent settlements have also been adjudicated under Peruvian law.

    There's no doubt in my mind the original bond holders got screwed, but the whole issue', which is really about history and politics - not fiscal responsibility - is something Peru has to deal with. The intervention of Grammercy is simply cynical opportunism.

    Oct 15th, 2015 - 01:40 am 0
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