The land the government
seized is currently
valued at more than
The story of the debt Peru refuses to repay began in 1968, when a communist military dictatorship backed by the Soviet Union took power in a coup. The new regime confiscated private farmland from citizens in an attempt to redistribute wealth and transform the land ownership structure. Owners of seized properties were required by law to accept agrarian reform bonds as compensation.
From 1969 to 1982, the dictatorship expropriated and redistributed approximately 23 million acres of rural land. In return, Peru issued debt in the form of agrarian reform bonds structured as follows:
| BOND CLASS | ANNUAL INTEREST RATE | DURATION |
| A | 6% | 20 Years |
| B | 5% | 25 Years |
| C | 4% | 30 Years |
The government began defaulting on Peru’s debt—including these bonds—during a period of economic crisis in the 1980s. Peru had stopped repaying the agrarian reform bonds entirely by 1992, defaulting on an estimated several billion dollars of debt.
Meanwhile, the land the government seized is currently valued at more than $42 billion.