Argentina facing US$1.46 bn bill after losing case over GDP-linked bonds

REUTERS: Argentina faces a potential 1.33 billion-euro (US$ 1.46 billion) bill after losing a lawsuit at London’s High Court on Wednesday over payments due on euro-denominated securities linked to Argentina’s gross domestic product (GDP) in 2013.

Four hedge funds, holding around 48 percent of the GDP-linked securities issued between 2005 and 2010, sued the South American republic in 2019, seeking damages of up to 643 million euros.

Palladian Partners L.P., HBK Master Fund L.P., Hirsh Group LLC and Virtual Emerald International Limited argued at a hearing in October that Argentina had a “propensity” to manipulate economic data in order to save billions of dollars.

Susan Prevezer, representing the funds, said economic statistics were “the subject of political direction” in Argentina under former president Cristina Fernandez de Kirchner, who served from 2007 to 2015.

However, Argentina’s lawyers said that “no rational government deliberately understates GDP” and pointed out the country had paid nearly US$ 10 billion to holders of its GDP-linked securities since they were first issued in 2005.

Judge Simon Picken ruled in the four funds’ favour on Wednesday, saying in a written ruling that Argentina should pay 643 million euros plus interest.

The judge also ruled that Argentina should pay around 1.33 billion euros in relation to all of the GDP-linked securities, of which the four funds hold approximately 48 percent.

Argentina’s lawyer Tamara Oppenheimer said at a brief hearing on Wednesday that the country is likely to seek permission to appeal against the ruling.