A US hedge fund took legal action Thursday to force the government of Peru to pay off $1.6 billion worth of defaulted bonds issued by the country's former military regime. In a case echoing Argentina's battle with US hedge funds over its defaulted bonds, Connecticut-based Gramercy Funds Management said the government had refused to negotiate with it over the debt it bought at a steep discount 10 years ago, hoping to win full repayment. Gramercy said Lima had "selectively" defaulted on the local-currency "land bonds" started in 1969 and continued in the 1970s to compensate owners of expropriated...