Hedge Fund Demands Debt Payment from Peru

October 8, 2015 James Heinsman In the News

Emerging markets hedge fund Gramercy is turning to Peru to pay up on the debt they owe as a result of a failed attempt at economic and agrarian reform in the late 60s and early 70s of the twentieth century.

The hedge fund purchased a series of bonds which were issued to landowners when their property was taken by the leftist junta led by General Juan Velasco. As the economy collapsed the government was forced to stop servicing the debts.

Courts in Peru have always held that the government must repay the bonds. But succeeding administrations hesitated due to the huge cost and continued to defer or reduce their payments.

Gramercy is now telling Peru to pay up, saying that the current repayment schedule is unfair to the creditors, which includes many Peruvians, and makes the country look bad as far as their credit is concerned.

“While recently seeking a consensual resolution, we were told point blank by a senior Peruvian official: ‘Make us care’,” said James Taylor, partner and chief legal officer of Gramercy. “Given Peru’s indisputable ability to pay a $5bn debt, this clearly is a voluntary and selective default.”

debt, General Juan Velasco, Gramercy, hedge fund, Peru,

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