“Egan-Jones believes that Peru’s current treatment of the Land Reform Bonds potentially sets a dangerous legal precedent for all Peruvian sovereign obligations…”
— Egan-Jones Ratings Company
Be wary of investing in Peru through their outstanding and future sovereign bond issues given the government’s history of selective default:
Rating agencies are sending mixed signals about the risk of investing in Peru bonds – Egan-Jones Ratings Company and HR Ratings have assigned a “default” rating to the agrarian reform bonds, while Fitch and Standard & Poor’s have indicated Peru must disclose additional information in order for them to rate the bonds.
Ask yourself, which bonds will Peru selectively default on next? – Anyone who considers investing in Peru sovereign bonds should bear in mind the country is defaulting on its agrarian reform debt by choice, not necessity. Peru currently maintains one of the lowest debt-to-GDP levels in Latin America at approximately 24%; the total amount owed on the agrarian reform bonds is estimated to be about 2% of Peru’s GDP.