Gramercy Files Arbitration Claim

On June 2, 2016, Gramercy Funds Management filed a US $1.6 billion arbitration claim against the Republic of Peru for violations of the U.S.-Peru Trade Promotion Agreement in relation to its holding in Peruvian Agrarian Land Reform Bonds. In a statement, Gramercy said the Land Bonds constitute a multi-billion dollar selective default that affects not only Gramercy but thousands of Peruvians.

For several years, Gramercy has attempted to engage in negotiations with Peru to find a solution for the Land Bond debt, but the government has consistently declined serious discussions. Instead, Peru asserts that it is following a legal process. But that process has been tainted by a major court ruling that was fraudulently doctored with liquid paper (white-out), leading to an on-going criminal investigation. Learn more by clicking below to read the Arbitration Claim and the Lima Police report on the white out scandal.


Fighting for Peru to restore trust and honor its bond debts.

Peruvian-American Bondholders for Justice seeks a swift resolution and fair compensation for the holders of unpaid land bonds, which were issued to Peruvians after a leftist dictator forcibly expropriated their land. Peru has the financial means and legal imperative to repay the bonds but for forty years has evaded and delayed its responsibility to correct this past injustice. A fair repayment of the bonds will ensure Peru’s good international standing, restore the trust of its people in the rule of law, and further encourage increased future investment in the country.

The History

The History

From 1969 to 1982, the Peruvian government expropriated 23 million acres of rural land —an area the size of Indiana—from thousands of property owners. The landowners were issued Agrarian Reform Bonds that the state promised to repay in 20 to 30 years. But in the 1980s and 90s, Peru was devastated by a series of economic crises that left the face value of the bonds worthless.

Despite being constitutionally bound to compensate bondholders for the fair value of their land, the Peruvian government stopped repaying the bonds, completely ceasing all payments around 1992. Today, Peru has an approximate $5.1 billion debt obligation with regard to the bonds.

Peru Breaking the Public Trust

Breaking the Public's Trust

The Peruvian government avoided its obligation to repay the bonds through decades of injustice and evasion.

  • 1969-1982

    Peru seizes 23 million acres of land worth approximately $42.4 billion.

  • 1980s

    During a period of economic crisis, Peru begins defaulting on the bonds.

  • 1992

    Despite a guarantee of repayment, Peru stops repaying the bonds altogether.

  • 1996

    Peru passes a law allowing the government to repay the bonds at face value, which after years of hyperinflation and currency devaluation renders them worthless – about one billionth of their actual value.

  • 2000

    Peru’s government, through an emergency decree, tries to avoid paying the bonds by replacing bonds with new debt that would not earn interest and would take 30 years to mature.

  • 2001

    Peru’s Constitutional Tribunal rules that the government’s 1996 attempt to pay bonds at face value is unconstitutional and confirms bondholders are entitled to the full original value of the bonds.

  • 2001-Today

    The Executive branch defies the Constitutional Tribunal, Supreme Court and Legislative branch by making no effort to repay the bonds at a fair price, and as mandated by the constitution.

  • 2004

    The Constitutional Tribunal rules that bondholders cannot be forced to accept the new interest-free bonds mandated by the 2000 emergency decree.

  • 2006

    A report by Peru’s Congress acknowledges Peru’s promise to repay the bonds and the “essential” need to do so at a fair price.

  • 2006

    Peru’s Supreme Court affirms the 2001 Constitutional Tribunal decision that bonds must be paid at full original value.

  • 2010

    Peru’s Supreme Court again affirms the 2001 Constitutional Tribunal decision.

  • 2013

    The new Constitutional Tribunal votes to uphold its 2001 decision, but its President changes the opinion without the full Tribunal’s consent to enable the government to ignore established methods for calculating the fair value of the bonds.

  • 2014

    Peru’s government continues to avoid repaying bondholders at a fair price, issuing guidelines that rely on unsound formulas that value the bonds at less than a penny on the dollar of what the bonds are worth. The guidelines also force bondholders to waive all their legal rights and allow the government to discriminate against bondholders based on age, among other things. The government also reserves the option not to pay at all.

  • 2015

    President of the Constitutional Tribunal admits to changing 2013 decision without the full Tribunal’s consent.

Bond Calculator

Bond Calculator

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Fix this Injustice!

It’s time for Peru to fix this injustice.

All three branches of the Peruvian government acknowledge that bondholders are entitled to fair repayment of the amount owed on the bonds.

“This shouldn’t go on any longer and it can’t go on any longer…Peru today has a respected economy and aspires to be a first-world country. With that comes responsibilities. And one of those responsibilities is to honor its debts.”

Former Peruvian Prime Minister Beatriz Merino

Peru Can Do It

Economists agree —
Peru has the capacity to repay this debt.

Repaying the debt by issuing new bonds would not adversely affect Peru's debt-to-GDP ratio.

Since the mid 1990’s, Peru’s economic growth has been outstanding. Today, Peru’s debt-to-GDP ratio is better than many of the world’s most stable economies – including the US, Germany and Switzerland – as well as its Latin American peers.

It would not hurt Peru’s general budget.

Only a fraction of a percent of the current value of the government’s 2015 budget is needed to honor the debts.

Peru Should Do It

Repaying has benefits.

  • Restored
    Public Trust

  • Enhanced
    Investment Reputation

  • Decreased
    Borrowing Costs

Repaying the bonds “would have a very positive impact on Peru’s overall reputation in the market,” former Minister of Economy and Finance Dr. Ismael Benavides Ferreyros said in a February 2015 report. It “would create a better level of confidence among foreign and domestic investors, helping to attract capital investment in a number of ways.”

Not Repaying Has Costs

Not repaying has costs.

  • Lessened
    International Standing

    The land reform debt is a black cloud hanging over Peru’s aspirations to join the Organization for Economic Cooperation and Development (OECD).

  • Weakened Rule of Law

    By ignoring the will of the legislative and judicial branches, the Peruvian executive is undermining its democratic institutions.

  • Scare Off Investors

    International investors will turn to other countries with stronger institutions and adherence to the rule of law.

Who We Are

Who We Are

We are a coalition of Peruvian American bondholders, their families and other allied groups who believe the time has come for Peru to honor its promise and correct a past injustice by repaying the land reform debt.

We are part of a broader alliance, Alliance for the Fair Payment of Land Reform Bonds, in Peru and around the world.

Join the Organization


For all media inquiries contact John Anderson at