Hedge funds revive dispute over Argentina GDP-linked securities

Aurelius Capital Management and a group of other hedge funds renewed a lawsuit against Argentina seeking payments on securities tied to the performance of the South American nation’s economy. 

A federal judge in New York threw out their suit in 2024, saying the funds failed to meet pre-conditions for legal action specified in the agreement governing their investments in Argentine gross domestic product-linked warrants. 

The funds said in new complaint filed Wednesday that they had now satisfied the requirements, which included getting at least 25 percent of the bondholders to make a written request to the bond trustee.

Aurelius first sued in 2019, claiming the Argentine government had failed to make nearly US$160 million in payments on the fund’s US$1.4 billion in warrants. Other funds later joined the case with similar claims. The warrants were given to holders of defaulted Argentine sovereign bonds who were willing to accept newly issued bonds at a sharp discount. 

The warrants allegedly entitled investors to payments when Argentina’s GDP expanded by more than three percent in a year.

Aurelius was one of a group of funds that by 2010 had bought up large chunks of debt on which Argentina defaulted in 2001.

Lawyers for Argentina and representatives of the nation’s US embassy didn’t immediately respond outside regular business hours to requests for comment.

The case is Aurelius Capital Master, Ltd. et al v. The Republic of Argentina, 26-cv-337, U.S. District Court, Southern District of New York (Foley Square).