BROOKFIELD ASSET MANAGEMENT LTD (BAM.US) faces intense criticism from a leading Peruvian presidential candidate due to debt problems at its toll road operating subsidiary. The subsidiary has defaulted on $500 million in bonds, causing losses for pension funds holding the majority of its debt. S&P Global Ratings stated that the company, named Rutas de Lima, has only been able to pay 6% of its 1.8 billion Peruvian sol (approximately $524 million) outstanding debt to bondholders, constituting a default. On Wednesday, S&P further downgraded its debt rating to D, indicating the company has defaulted. A representative for BROOKFIELD ASSET MANAGEMENT LTD did not immediately respond to a request for comment.

Rutas de Lima has become the primary target of criticism from Rafael Lopez Aliaga, the former mayor of Lima. The conservative figure is a leading contender in the presidential election scheduled for later this month. He asserted that the toll road contract was obtained through corrupt means, disproportionately impacts poorer families, and should be annulled. Lopez Aliaga recently welcomed Rutas de Lima's announcement of liquidation, following a ruling by a local court that stripped the company of its rights to collect tolls and generate revenue.

BROOKFIELD ASSET MANAGEMENT LTD has filed a $2.7 billion arbitration claim against Peru, alleging the illegal expropriation of its toll road project. Lopez Aliaga stated that if elected, the Peruvian government would file a $3 billion counterclaim against BROOKFIELD ASSET MANAGEMENT LTD. The bonds were issued a decade ago and were the largest local-currency corporate bond in Peru at the time. S&P stated, "Given that the project is completely unable to generate cash flow, we expect a debt restructuring will be difficult to achieve."