Argentina lost a lawsuit in London on Wednesday against four hedge funds and must pay 1.33 billion euros (US$ 1.45 billion) corresponding to the values linked to the gross domestic product (GDP) of Argentina in 2013commonly known as “GDP coupons”.
According to the Reuters agency, the lawsuit was filed in 2019 before the High Court of London for Palladian Partners, HBK Master Fund, Hirsh Group and Virtual Emerald International Limitedwho claimed compensation of up to 643 million euros (about US$ 700 million).
Today Judge Simon Picken ruled in favor of the four funds and sentenced the country to pay the aforementioned amount plus interest.
The magistrate also ruled that Argentina must pay some 1.33 billion euros (about US$1.45 billion) in relation to all GDP-linked securities, of which the four funds own approximately 48%.
GDP coupons and the manipulation of INDEC statistics
The GDP-linked Marketable Securities debuted in 2005 when Roberto Lavagna, then Economy Minister, and his Finance Secretary, Guillermo Nielsen, carried out the restructuring of the defaulted debt in 2002.
These instruments, which were colloquially known as “GDP coupons”, determined payments to bondholders when economic growth for the year exceeded 3%.
The mechanism was designed as a stimulus for bondholders to enter the debt swap – the country would pay more if its economy grew – and GDP coupons quickly became one of the favorite assets of the local market given the growth at “Chinese rates”. that took place during the presidency of Néstor Kirchner and the first term of Cristina Kirchner.
The auspicious panorama changed from the second term of the current vice president, when the GDP data published by INDEC, controlled by the then Secretary of Domestic Trade, Guillermo Moreno, began to be manipulated and the meaning of the coupons was distorted.
Thus, as of 2012 there were no new disbursements for this concept.
In 2018, already in full government of Mauricio Macri, the economic growth data questioned by the four funds were reviewed and it was determined that during 2013, the year of the controversy, the GDP had grown 2.4%, below the threshold that triggered the payments.
Those unfulfilled payments were the ones that generated the lawsuit that was resolved today in London.
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