Argentina May Sell Bond to Pay $16 Billion YPF Lawsuit Award

Patrick Gillespie
·3 min read
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(Bloomberg) -- Argentina’s President Javier Milei is considering issuing a perpetual bond to pay a $16 billion lawsuit award stemming from the nationalization of state-run energy company YPF.

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Swinging between political jabs and policy intentions, Milei suggested that the government would issue the bond without a fixed maturity while charging Argentines the “Kicillof tax,” named after Buenos Aires Governor Axel Kicillof who spearheaded efforts to nationalize YPF in 2012.

“Here we have a problem because we don’t have the money, we don’t have $16 billion, that’s the reality — but we have the willingness to pay,” he said in a TV interview with La Nacion Tuesday night. “What we’re going to do, it’s an idea we’re working on, is to create the Kicillof tax, meaning pay this fund with a perpetual bond.”

Milei was referring to litigation fund Burford Capital, which acquired the right to pursue the claims in 2015 and stands to collect the biggest share of the award. Shares of the fund rose as much as 14% in London.

The Economy Ministry didn’t immediately provide details about Milei’s idea. Burford Capital didn’t respond to a request for comment after business hours.

Milei issued a decree last week ordering all state-run companies to prepare for privatization, although he hasn’t set a timeline for the sale of the energy company.

After several years of litigation in New York, a judge awarded plaintiffs $16 billion in a lawsuit against Argentina that claimed the country had fumbled key legal aspects of the YPF nationalization. Burford Capital stands to receive $6.2 billion of the total. US Federal Judge Loretta Preska stated that Argentina must pay by Jan. 10 or face the potential seizure of assets.

The case adds to Argentina’s long list of financial troubles. With central bank reserves in the red, the country needs to start repaying next month creditors who accepted a $65 billion bond restructuring in 2020. It also has to renegotiate a $44 billion deal with the International Monetary Fund.

Milei said the current IMF deal has collapsed because the previous government missed key targets agreed upon with the Fund, and added that his austerity-driven administration is working to reset the program.

“The Fund sees us as heroes,” he said. “We’re working to comply with the agreement.”

Milei also told La Nacion he would call for a national referendum if congress votes down the emergency decree he issued last week with hundreds of austerity measures.

And with inflation estimated to finish December near 200% a year, the president confirmed his government would increase Argentina’s largest peso bill denomination from 2,000 pesos (about $2.50) to 50,000 pesos to avoid people carrying around massive wads of cash for basic transactions.

(Updates with move in Burford shares in fourth paragraph. A previous version of this story was corrected to clarify that Burford Capital receives only part of the entire lawsuit award.)

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