Argentina Appeals $1.69 Billion Decision Over GDP-Linked Securities in London Court

Argentina has appealed to a London court to overturn a $1.69 billion ruling related to GDP-linked securities. The South American nation argues payments should only occur during economic growth. The High Court previously ruled against Argentina, leading to a substantial financial obligation plus interest.

Argentina on Tuesday urged a London court to overturn a ruling which left the South American nation facing a 1.56-billion-euro ($1.69 billion) bill, arguing it should only pay out on GDP-linked securities when its economy is healthy.

Four hedge funds, holding around 48% of the securities issued between 2005 and 2010, sued Argentina in 2019 and London's High Court ruled in their favour last year – leaving Argentina on the hook for a 1.33-billion-euro bill plus interest. Argentina was given permission to appeal earlier this year. Its economy faces galloping annual inflation of nearly 300%.

Its appeal turns on the terms of the securities, which were issued in the wake of Argentina's unprecedented economic crisis culminating in the world's biggest-ever sovereign debt default. Last year, a judge found Argentina had sought to use a different measure for GDP growth which was not permitted under the securities. The country is now asking the Court of Appeal to rule its interpretation is correct.

Argentina's lawyer David Railton said the rival interpretations "produce very different economic and commercial consequences", namely the difference between paying 1.3 billion euros plus interest or nothing. He argued in court filings that the securities were designed so that "payments under them would only be made when the republic's economy was growing at a sufficiently healthy rate".

The High Court's ruling means that the "the republic could be required to make payment under the securities when its economy is not in fact growing at all, or is in recession, thus jeopardizing the republic's ability to service both its 'GDP-linked' and conventional debt," Railton added. The four hedge funds, however, said Argentina's case on appeal was "an exercise in wishful thinking".

Their lawyer Sue Prevezer said in written arguments that Argentina was simply trying to "rewrite the securities in a way which now suits its position". The appeal is due to conclude on Thursday with a ruling expected at a later date. ($1 = 0.9211 euros)