The Spanish Navy training ship Juan Sebastian Elcano, carrying Spanish Crown Princess Leonor, arrives in the port of El Callao in Peru in April 2025. File Photo by John Reyes/EPA
Peru’s government approved issuing sovereign bonds worth up to about $1.2 billion to finance expansion and modernization of its main naval base in Callao, according to an official decree published Thursday.
The project, to be carried out by the Ministry of Defense, is seen as a key step to strengthen Peru’s operational capacity and expand its maritime commercial activity in the Pacific.
The military infrastructure upgrade is supported by a recent approval from the U.S. Department of State for sale of equipment and services valued at $1.5 billion for this phase of the project.
Washington will provide design, equipment and construction services to ensure the infrastructure meets international interoperability standards.
The U.S.-approved financing will be channeled through the Foreign Military Sales program, with the U.S. Army Corps of Engineers serving as the main contractor.
The U.S. Department of State notified Congress about the plan, noting that the initiative will strengthen a strategic ally in South America and support Washington’s foreign policy objectives, CNN Chile reported.
The new base aims to modernize the operational capabilities of the Peruvian Navy amid growing trade in the Pacific. Plans include submarine berths and new command buildings for strategic control of the South Pacific.
The expansion will also include new docks and is expected to free up 198 acres for commercial development at the Port of Callao.
The proximity between the naval base and the Chancay megaport, developed with Chinese capital, has sparked debate, placing two global powers within less than 50 miles along Peru’s central coast, according to Infobae.
Previously, the United States warned that Peru could be losing sovereignty after a court ruling that limits state oversight of the Chancay port, operated by COSCO Shipping, describing the situation as a “regional warning.”
The infrastructure will remain under exclusive Peruvian ownership, though up to 20 U.S. experts are expected to be present for up to 10 years to oversee construction and technical cooperation.
According to the decree, the sovereign bonds will be issued in local currency, with semiannual interest payments and placement through market auctions. The securities will be freely tradable and may be issued in one or more tranches during the execution of the project.
Peru’s Ministry of Economy and Finance is to execute the operation, while payments of principal, interest and related costs will be covered through national budget allocations for public debt servicing.
