Anchorage raises a rare fund with just one bet on Argentine suit

Anchorage Capital Advisors LP has raised a rare type of fund whose returns hinge on the outcome of a protracted and controversial lawsuit tied to the nationalisation of Argentina’s biggest oil company.

The fund, a so-called continuation vehicle, holds just one asset: a loan backed by a legal claim that stems from the nationalisation of YPF, according to people familiar with the matter. That means the outcome of that case will determine what investors ultimately earn.  

The dispute dates back to 2012, when Argentina seized control of YPF. Minority shareholders, Spanish companies Petersen Energía Inversora and Petersen Energía as well as money manager Eton Park Capital Management, sued Argentina over subsequent losses, arguing the government breached YPF’s statutes by not offering to tender for the remaining shares in the company. 

In 2023, a US judge ruled in favor of the plaintiffs and ordered Argentina to pay roughly US$16 billion in damages. 

The loan in the new Anchorage fund was issued by Petersen, which was “driven to bankruptcy” after YPF’s nationalisation, according to a court document. When Argentina took control of YPF, it said it would reinvest dividends into the company, depriving Petersen of income it relied on.

The senior-secured loan in the fund had a carrying value of US$188 million at the end of last year, and the total claim amount would be more than US$600 million, the people said.

Given the rulings in Petersen’s favour, Anchorage saw further potential upside to the loan, which was previously held in its Anchorage Illiquid Opportunities Fund V from 2015, the people said. As such, Anchorage transfered the asset to a new fund when the prior vehicle expired. 

That makes it a rarity in credit markets – a continuation secondaries fund housing a single asset. Private managers are increasingly tapping continuation vehicles to extend their hold on prized assets. They help cash out old investors while bringing in a new set of investors and fresh stream of profits.

A representative for Anchorage declined to comment.

Still, the plaintiffs’ – and the fund’s – success is not guaranteed. Argentina has appealed the ruling and late last month, judges in the US Second Circuit Court of Appeals signalled an openness to overturning the verdict. 

Two of the three judges asked sceptical questions about whether the US District Court case that resulted in the massive award, which interest has now swelled to US$18 billion, should have proceeded there. The appeals court isn’t expected to deliver a decision for several months at least, and the losing party would likely then appeal to the US Supreme Court, Bloomberg reported at that time. 

This also comes amid a strengthening relationship between President Donald Trump and Argentine President Javier Milei which has boosted the country’s image with investors. 

Burford Capital Ltd, which financed the litigation for the shareholders, said in a 2023 statement that Petersen stood in line for US$14.3 billion of the US$16-billion award while Eton Park, which was unwound in 2017, could expect US$1.7 billion. 

In its third quarter earnings on November 5, Burford noted the recent oral arguments of the appeals court. It said it believed “YPF-related assets will ultimately deliver a 10-figure recovery for Burford,” though said that “litigation risk remains.” 

Argentina took control of 51 percent of YPF in 2012 after accusing the majority shareholder, Spanish company Repsol SA, of failing to invest sufficient resources into oil production. At the time, Argentina was already fighting claims by investors led by Paul Singer’s Elliott Investment Management over its 2001 default on $95 billion in sovereign debt.