Argentina rejected by UK Supreme Court in US$1.5-billion bond case

Argentina lost a bid at the UK Supreme Court to hear its appeal on a ruling that would force the South American nation to pay US$1.5 billion in damages to holders of the country’s growth-linked bonds. 

In an order signed Monday, the UK’s top court refused to hear the appeal over the 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 court’s decision puts pressure on the country’s buffer of foreign currency reserves, money that Argentina needs for bond payments and to eventually lift capital controls. Lawyers for Argentina argued in May that it would struggle to service some of its debt if it had to pay damages stemming from the GDP-linked bonds. 

UK courts 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 the government already paid earlier this year to UK authorities. 

“During the course of this case, Argentina has repeatedly said to the court that if a final decision is made in favor of the warrant holders that the money to pay its creditors will need to be found,” said Aidan O’Rourke, Partner at Quinn Emanuel acting for the hedge funds. “That time has now come.” 

President Javier Milei’s administration needs to make some US$9.45 billion in hard-currency bond payments in 2025, according to data compiled by Bloomberg. While there’s consensus among Wall Street analysts about the country’s willingness to pay, funding sources are still tight. 

Milei’s finance secretary, Pablo Quirno, said last week that monetary authorities were working on a repurchase loan agreement, or repo, to secure some cash ahead of its next debt payment in January. 

Lawyers for Argentina declined to comment. A spokesperson for the Milei administration didn’t immediately respond to requests for comment.