(Bloomberg) -- Argentina must compensate investors for losses in the country’s growth-linked securities after the South American nation changed the method of calculating gross domestic product, a London court ruled. The notes surged to a four-year high.

Hedge funds, including Palladian Partners LP, won an order requiring Argentina to pay about €1.3 billion ($1.5 billion) plus interest to be calculated from December 2014, a London court ruled on Wednesday.

“The judgment is obviously significant,” Argentina’s lawyer said in court. “We will be seeking a stay on execution” and will appeal the ruling.

Argentina’s euro-denominated warrants surged as much as 51%, reaching the highest since 2019, before paring gains. 

The ruling is a setback for the south American nation’s economy that’s on the brink of another recession this year and is saddled with some of the world’s highest inflation. A historic drought is making matters worse. 

At the root of the case is the country’s default on $95 billion of debt in 2001 amid one of the worst financial crises in its history. GDP-linked bonds that pay out when the economic expansion reaches a set threshold, were part of a restructuring program. 

A dispute arose after Argentina changed the base year for calculating growth in 2013. The four funds, including HBK Master Fund LP, Hirsh Group LLC and Virtual Emerald International Ltd. had petitioned the UK court in 2019 alleging Argentina avoided payments on the bonds by making the change.

Argentina’s lawyers had said the changes were necessary part of creating a sustainable debt plan for the nation. Without the changes, the returns on the warrants would be guided by outdated measure of growth until 2035 and would be divorced from the country’s real economic performance, lawyers for Argentina argued. 

The law firm representing Argentina didn’t respond to a request for comment after the ruling. 

The four funds expect Argentina to use the older GDP data series for future payments on the warrants until 2035, said Aidan O’Rourke, a partner at law firm Quinn Emanuel Urquhart & Sullivan representing the funds. 

“This money should have been paid to warrant holders in 2014 when it first became due, and the claimants look forward to all holders finally now receiving payment,” he said.

(Updates with bond price move starting in the fourth paragraph)

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