Peru’s Finance Minister Alonso Segura said country would oppose legal challenge. 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.
The South American country defaulted on the $5.1bn (£3.33bn) 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.
This week Peru has 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 battles.
Peru’s government has dispatched troops to a violence-wracked southern coastal valley where protests against a copper mining project have claimed the lives of two civilians and a police officer.
Defense Minister Jakke Valakivi told reporters Sunday that the 500 troops sent to reinforce 2,000 police would guard strategic locations including bridges and gas stations.
Two civilians have been killed by police bullets since protests began in late March against the $1.4 billion Tía María project of Mexican-owned Southern Peru Copper. On Saturday, a police officer died. His skull had been fractured by a rock.
Farmers fear the project would contaminate their crops. More...