US Federal Judge Loretta A. Preska of the United States District Court for the Southern District of New York Tuesday ruled against Argentina and in favour of the plaintiffs with regards to the South American country’s handling of the official figures upon which profits were to be measured for the bondholders.
Preska acknowledged that there may have been bad faith on the part of the country’s INDEC figures released in 2013 and which were relevant for the financial transactions
INDEC stands for National Institute of Statistics and Census.
Preska found that the Aurelius Capital Investment’s claims had been substantiated and that it was likely that Argentina’s government had meddled with the official figures to be released so as to avoid paying a GDP-based bonus.
Despite having dismissed this bulk of the complaint last year, Preska ruled that Argentina cannot ignore the payment of the interest on the GDP coupon to creditors as agreed upon.
According to the judge, Argentina acted in “bad faith” in 2014 by altering the measurement of the 2013 GDP coupon. Preska pointed out that the modification of the calculation carried out by Argentina to estimate the growth of its GDP in 2013 as illegal despite the fact that Argentina it had the power to modify the way of estimating this indicator, just as the rest of the countries can.
Aurelius had sued Argentina in January 2019 in the US for USD 84 million. The fund stated then that the Government did not correctly calculate the payments linked to the GDP due to an alleged manipulation of the INDEC 2013 figures.
These bonds, issued as a part of the debt restructurings in 2005 and 2010, granted holders additional payments based on the performance of the economy.
Aurelius is expected to request a summary sentence, which should be determined by Preska by April 16.
Should Argentina choose to appeal Preska’s ruling, the case will be up to the Court of Appeals of Second Southern District of New York.
The new judicial decision would cost Argentina around USD 500 million plus legal fees. Similar actions worth around USD 700 million are under way in London courts.