At the end of 2001, for instance, when Argentina defaulted on the larger part of its public debt, the debt-to-GDP ratio was slightly above 50 per cent (though already 15 percentage points higher than three years earlier and 90 percentage points below its nominal value one year later, after the 1-to-1 peso-dollar parity had been abandoned).
That translated into uncertainty about the ultimate solvency of institutions holding those assets – and then about the ultimate solvency of any of their creditors. Spreads in credit markets between Treasury returns and other bond returns began to widen – at first slightly and then alarmingly as the panic conditions took firmer hold. 2  See Willardson (2008) and Willardson and Pederson (2010).