ABDA: Peru sold $3 billion of debt on ‘materially misleading’ material

By Tali Rackner

Norfolk, Va., Jan. 19 – Peru allegedly sold about $3 billion of debt in 2015 based upon “materially misleading” prospectuses, according to a press release by Land Reform Bondholders Association (ABDA).

ABDA said one of its members retained John C. Coffee, a securities law professor at Columbia Law School, to provide his opinion on whether Peru had violated U.S. securities law by omitting material information and making material misstatements in prospectuses filed with the U.S. Securities and Exchange Commission (SEC).

Coffee reviewed all three of Peru’s 2015 prospectuses used to sell roughly $3 billion of debt to global investors during 2015.

According to the release, “he concluded that the prospectuses were ‘materially misleading’ because, among other things, Peru failed to disclose its ongoing default on an estimated $5 billion sovereign obligation, the Peruvian Land Reform Bonds, the related lawsuits and disputes with creditors, and criminal investigations into fraudulent documents in the most recent court ruling impacting the bonds.”

The press release said that Coffee also had problems with Peru’s assertions that (a) the supreme decree updates the value of the land reform bonds; and (2) it does not have any disputes with its internal or external creditors.

“We are incredibly disappointed that the Humala administration is willing to violate U.S. securities law, deceive international investors and damage its reputation in the global financial community, all to try to hide the land bond issue,” ABDA president Ramon Remolina said in the release.

“It is shocking that this administration would say in documents used to sell new bonds to international investors that it was not in default on the Land Bonds and that it had no disputes with creditors. Even a simple Google search reveals these issues.

“This embarrassment for Peru follows the recent criminal investigation into fraud in the Constitutional Tribunal’s ruling on the Land Bonds, where white out was used to alter a justice’s signature.”

“We urge this administration to do what it should have done a long time ago – meet with creditors and negotiate an acceptable solution that works for everyone. This is what responsible countries do. Every country in our region that had Land Bonds has resolved them except ours. We understand that Peru is planning to sell more than $2 billion in new debt in 2016. If Peru plans to keep issuing new debt, it should take meaningful steps to resolve its defaulted debt,” Ramolina said in the release.

© 2015 Prospect News.
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