Landowners whose land was expropriated by Juan Velasco’s government in the late nineteen sixties and early nineteen seventies were compensated in ‘Agrarian Reform Bonds’. The government defaulted on the bonds in the 1980s after an economic crisis and since then has been locked in a lengthy dispute with bondholders over whether and how it should repay them.

Inadequate compensation

Gramercy purchased a chunk of the bonds at a discount in 2008 and is now one of many bondholders clamouring publicly for fair settlement. The crux of the argument is how to value the bonds, with the current administration using an adjustment methodology that offers a fraction of the compensation that bondholders claim they are owed. Gramercy estimates that its payout offer from the government will be $24m at most and has threatened to bring a claim against Peru under a tribunal system established in a US-Peruvian trade deal. Sources: BBC News; Financial Times