Argentina's bonds suffered one of their largest single-day price drops on record today as it appears ever more obvious that a re-default will occur. With Elliott still battling over holdouts from a prior life, it seems the smart-money is long-gone this time leaving the momentum-chasing yield-grabbing flow suddenly fully cognizant that the bonds are in fact dead. 'Acceptance' is upon us as we wrote a month ago: "As for the Argentina vs Elliott bare-knuckled match, enjoy it while you can: very soon the Latin American country will likely proceed with yet another round of creeping selective defaults, exchange offers, consent solicitations, and other debt reorganizations, which will make the current free-for-all into a total and epic labyrinth of creditors, interests, bondholder classes, general unsecured claims, and other total confusion."
After all why bother with Argentina: there are far higher IRRs to be generated by shorting local-law Spanish bonds while buying their international-law cousins. In fact, courtesy of the current government's arrogance and naivete, the position can be put on in a cost, and carry, neutral basis. Then sit back and just wait for the spread to blow out.
Because what is happening with Argentina today, is coming very soon to every banana republic near you.