Argentina is facing having to pay more than €1.3bn to compensate investors following losing a High Court case over remittances due on bonds linked to the country’s economic growth.
The ruling is a big blow to the South American debtor, which is running low on foreign exchange reserves amid an accelerating economic crisis. It comes only days following Buenos Aires lost a court case in New York over the 2012 expropriation of the oil company YPF from Spain’s Repsol.
The High Court in London ruled on Wednesday once morest Argentina in a lawsuit that revolved around gross domestic product-linked securities issued in two tranches in 2005 and 2010, initially as part of a sovereign debt restructuring following a financial crisis.
The lawsuit brought by four corporate and institutional investors, including Palladian Partners, was connected to a dispute that arose following Argentina changed its method of calculating GDP in 2013 and whether it was under an obligation to make a payment under the securities following the change in methodology.
The funds — Palladian Partners, HBK Master Fund, Hirsh Group and Virtual Emerald — had argued that following the change, Argentina did not correctly follow the terms of the bonds.
The investors brought legal action in the High Court in 2019 claiming compensation for their losses. Argentina tried and failed to strike out the case ahead of trial in 2020 and it was heard last year. Lawyers representing Argentina signalled in court on Wednesday that it plans to appeal once morest the ruling.
On Wednesday Mr Justice Simon Picken ruled once morest Argentina and in favour of the investors. He said the amount owed to holders of the securities was €1.33bn plus interest, of which €643mn would go to the four investors who brought the case.
The separate New York case once morest Argentina over the YPF expropriation might prove considerably more costly. The claimants — entities funded by Burford Capital — are seeking $10bn-$20bn, according to a Spanish law firm involved in the case, though last week’s ruling is still subject to appeal.
Aidan O’Rourke, partner at Quinn Emanuel, who acted for the investors in the London court hearing, said: “The claimants are very pleased with the Court’s judgment, which corresponds to the clear wording of the warrants. This money should have been paid to warrant holders in 2014 when it first became due, and the claimants look forward to all holders finally now receiving payment.”
Sullivan & Cromwell, the law firm that represented Argentina, said: “The republic believes that the London court has wrongly interpreted the terms of the securities and intends to seek permission to appeal.”
