A three-year payment moratorium, a huge cut in interest rates and an across-the-board extension in maturities — the bond restructuring proposal that Argentina unveiled late last week was harsh by any standards.

And yet, in a sign of just how low expectations were ahead of the announcement, investors are now actually bidding up prices on the country’s $66bn of foreign bonds in the secondary market. Securities due in six years were trading at about 33 US cents on the dollar early Monday morning, up from 30c on Friday and 26c the day before...

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