European Debt

These are small countries. Its not too likely but not impossible that a bigger country will hit some political shocks. Then all bets are off

Uncertainties in emerging markets helped European bond issuancesy. Many unforeseen events can can easily worsen the current situation.

There is increased demand for many sorts of weak debt. Peripheral EUR sovereigns are in the long run still exposed to structural weaknesses.

The ECB seems to have organized a good equilibrium--see the paper by Krishnamurthy, Nagel, and Vissing-Jorgensen
-see background information here

These econonomies still in bad shape. Bond yields high, but Investors may be exuberant and overestimating chance of future bailouts.

Greece's debt is still unsustainable & Europe's banks are undercapitalized. Until that changes risks remain.
-see background information here

Sovereign bond yields and credit default spreads imply that default is a nontrivial possibility, but the more likely outcome is no default.
-see background information here

Reduced from 2-3 years ago, but still a fragile system.

Markets may believe default unlikely over the term of the bonds. That does not mean it is unlikely forever: Greek debt is still huge.

Default looks less likely, but structural problems in the euro zone remain, and much has yet to transpire before default is truly unlikely.

Low rates also reflect expectations of an ECB QE.

Not my field, but this seems to be basing a strong conclusion on a weak evidentiary foundation.

Encouraging but I am wary of generalizing to all Euro area countries.

It's hard to argue that markets are mis-pricing Euro area bonds, but I'm surprised by how strongly the price has recovered

The ECB seems committed to averting defaults.

I thought we had learned the lesson that low interest rates do not assure low risk.