Argentina is obliged to pay US$1.5 billion after the Supreme Court of the United Kingdom turned down an appeal in a case involving growth-linked bonds.
In an order signed Monday, the UK’s top court refused to hear an appeal over payments to hedge funds including Palladian Partners LP. The holders of those notes argued the losses were a result of a change by a previous Argentine government in how it calculated gross domestic product.
The news was confirmed by President Javier Milei’s government in Buenos Aires, which said it would be forced to pay up.
In a post on social media, Cabinet Chief Guillermo Francos said the case stems from the “manipulation of data by [the] INDEC [national statistics bureau] during the government of Cristina [Fernández de] Kirchner (2007-15)."
“There are no more prospects of appeal. The case has come to an end,” added the official.
In the case – known as "Coupon GDP" – Argentina is accused of modifying its formula for calculating its Gross Domestic Product (GDP) to avoid "making additional payments to bonds issued on the occasion of the debt swaps of 2005 and 2010," detailed Francos.
"The creative solutions of populism have carried negative economic consequences bringing the country into disrepute," he alleged.
The sentence was ruled by the High Court of London in April, 2023 and later confirmed by an appeals court last June.
Argentina appealed this decision and last Monday the British justice system made its decision in favour of the plaintiffs, who later said they are "satisfied" with this British court ruling in their favour obliging the Argentine government to pay them US$1.5 billion.
"The plaintiffs have always trusted in their case and are satisfied with the decision of the Supreme Court of the United Kingdom to deny the appeal. Payment has been pending for almost 10 years and they hope that Argentina pays within the period of 45 days established by the court," said Aidan O'Rourke from the Quinn Emanuel law office representing the plaintiffs.
The case was pushed by high risk funds like Palladian Partners LP with the British Supreme Court giving Argentina 45 days to pay the bondholders, Bloomberg reported on Tuesday.
Argentina could lose a payment of US$334 million made in advance earlier this year in the event of non-compliance, said the outlet.
This adds another element to the economic crisis of Argentina, which last month had an annual inflation of 209 percent, one of the highest in the world, with 52.9 percent of the population below the poverty line in the first half of 2024.
This news arrives while Argentina battles to obtain hard currency to replenish the Central Bank reserves needed to stabilise the exchange rate and meet debt commitments to creditors like the International Monetary Fund (IMF), to whom it owes US$44 billion.
The UK court established Argentina now has 45 days to pay the GDP bondholders. The Milei administration would be subject to enforcement action if it misses that deadline and it would also lose US$334 million already paid to UK authorities.
"During the course of this case, Argentina has repeatedly told the [Supreme] Court that if it makes a final decision in favour of the holders of the warrants, it will be necessary to find the money to pay its creditors. That moment has now arrived," said O'Rourke.
The case was lodged by four high risk funds: Palladian Partners LLP, HBK Master Fund LP, Hirsh Group LLC and Virtual Emerald International Limited.
"Nevertheless, the case is presented in the name of all bondholders because this sentence benefits them, regardless of whether they formed part of this trial or not. The court has ordered all bondholders to be paid," explained O'Rourke.
– TIMES/AFP/BLOOMBERG
