The default will be another risk factor for investors to consider, given ongoing geopolitical turmoil in Ukraine, Russia and the Middle East, and the Banco Espirito Santo crisis in Portugal.
"Recent news has not been conducive to staying with the risk-on trade and certain news stories could get worse, impacting investor confidence," said Chris Iggo, the chief investment officer for fixed income at AXA Investment Managers, in a note on Monday. "There is not much of a cushion of yield to protect investors from an increase in volatility."
'Substantial' economic cost
Last week, Olivier Blanchard, chief economist at the International Monetary Fund, said the economic cost to Argentina of defaulting again might be "substantial".
"I think that for Argentina, if it goes into default and doesn't pay the holdouts, there might be substantial costs in being basically unable to access markets for some time," he said at a press conference in Mexico City.
Given the comparatively small size of debt involved, Argentina's economy is viewed as unlikely to crash to the lows seen after the 2001 default, when gross domestic product (GDP) shrunk by nearly 11 percent and unemployment rose above 22 percent. Instead, Capital Economics sees Latin America's third-biggest economy contracting by a more-benign 1 percent this year.
Caicedo added that a sovereign default would markedly increases the chances of Argentine provinces defaulting and could also push the country to devalue its currency. "This would exacerbate inflation, which is already very high," he said.
—By CNBC's Katy Barnato