Contentious Peru bond could pay off handsomely for Gramercy fund

viernes 8 de julio de 2016 12:43 GYT

By Davide Scigliuzzo

NEW YORK, July 8 (IFR) - Hedge fund Gramercy stands to make massive returns if it wins a long-running battle with Peru over so-called agrarian bonds, new figures recently disclosed by the country show.

The Connecticut-based firm says it is owed around US$1.6bn on its holdings of the land bonds, and filed an arbitration claim for that amount last month.

Peru fought back this week, however, asking the arbitration tribunal to throw out the claim.

The country's official response also shed light, for the first time, on the hefty profits Gramercy could make on at least one of the bonds at the heart of the row - Bond No. 008615.

Gramercy bought over 9,700 land bonds from hundreds of individual bondholders between 2006 and 2008, accumulating a share of around 20% of the total outstanding during that time.

But it has not disclosed publicly how much it paid for each bond.

Bond No. 008615 is part of the Class B of land bonds, which had a maturity of 25 years and carried a coupon of 5%. It was issued in November 1972 with face value of 10,000 soles de oro - Peru's currency at the time - and had a residual value of 5,200 soles de oro when coupon payments stopped.

Gramercy purchased that bond in November 2006 along with two other notes with the same maturity and the same coupon for a total price of US$38,500.   Continuación...