In December 2001, Argentina announced it would not honour its sovereign (government issued) debt. Many investors were left holding Argentinean bonds now priced at a fraction of their recent value. A few years later Argentina announced it would pay back 25% of the face value of its debt. Comment on the effects of information asymmetries on government bonds markets. Do you think investors are currently willing to buy bonds issued by the government of Argentina?

Page 180 , Question 12 in book [The Econ of Money, Banking & Financial Mrkts, 5th Canadian edition]