At the end of July, Argentinian Economy Minister Axel Kicillof appeared on TV in New York and declared bankruptcy for his country, sending US markets into turmoil.

How did this unexpected bankruptcy come about? In 2001, when Argentina could not pay its debts, it borrowed heavily from US hedge funds to cope with the crisis. Now, it couldn’t repay on time its $1.33 billion debt in bonds and called for a rescheduling of its payments.

Meanwhile, the issue was taken to a local US court, which decided that the debt payments could be postponed if the hedge funds agree to it. But the funds did not agree, and called for immediate payments. The court then decided the debts must be paid by July 30. In a press conference a few hours before the deadline, the Argentinian economy minister said, “The vulture funds decided not to wait. We couldn’t reach an agreement, hence our declaration of bankruptcy.”

Standard & Poor's reacted by lowering Argentina’s grade to “selective default,” which is assigned to countries that default on repayment of loans and their interest. The latest lowering of the grade to bankruptcy happened to Greece in 2011.