If you’ve followed the recent evolution of fixed income products, you’re well aware that when it comes to pooling assets and securitizing cash flows, pretty much anything goes. From subprime auto loans, to credit card receivables, to P2P debt, to PE home flipper loans, you name it and there’s a fixed income security for it.
Given the above, we were fairly certain that when it comes to bonds, nothing would surprise us in terms of debtors, creditors, and the underlying assets.
We were wrong.
As Bloomberg reports [6], Illinois-based MMA Consultants 1 Inc has filed suit in U.S. District Court in connection with money the firm says it is owed by The Republic of Peru for bonds issued in 1875. Here’s more:
Fourteen bonds the country issued in 1875 .. are now held by an Illinois firm that says it’s having a hard time redeeming them.
MMA said it sent three letters to Peru’s Minister of Economics and Finance requesting payment to no avail. The company is suing for breach of contract. It didn’t reveal in the lawsuit how it came by the bonds.
[7]
If that were the whole story, it wouldn’t be all that interesting. Fortunately, there’s more:
[The] bonds were issued to pay off debt to a U.S. guano consignment company.
Each bond promised a payoff of $1,000 "United States Gold coin" plus 7 percent interest a year, according to the complaint filed Thursday by MMA Consultants 1 Inc. in federal court in New York.
The bonds bear the signature of Don Manuel Freyre, who is described as the "Envoy Extraordinaire and Minister Plenipotentiary of Peru," according to the complaint.
Because we cannot imagine what we could possibly add that would make this any more amusing than it already is, we’ll simply leave you with the following summary:
MMA Consultants 1 is attempting to collect what, with interest, amounts to $182 million in gold coins from "Envoy Extraordinaire" Don Manuel Freyre, in connection with bonds Peru issued 140 years ago to pay off a debt to a seabird dung consignment company.
(Don Manuel Freyre, Envoy Extraordinaire)
