Gramercy Seeks Billions From Peru For 50 Year Old Bonds

An UNCITRAL arbitration that we have been following here is heating up between Gramercy Funds Management LLC (Gramercy) and the Republic of Peru. Much like Elliot Management's fight against Argentina, the case against Peru pits a distressed debt fund against a sovereign state.

But Gramercy's case is fundamentally different from the open market bonds bought by Elliot in Argentina. Gramercy bought Peruvian Land Reform Bonds issued to local citizens when the country instituted a land reform program in the 1960s. After the world financial market's hyperinflation in the 1980s, Peru's currency – like those of much of the developing world – was devalued. Since then, Peru's economy has become robust and thriving, one of the fastest-growing in South America.