Political risk is rearing its head for some of Europe's peripheral countries, threatening to unsettle relatively calm markets.
Portugal goes to the polls early next month and Spain is expected to hold an election by year-end, with recent polls in both countries showing tightly-run races so far.
Uncertainty in Spain, the euro zone's fourth-biggest economy, may be fueled by regional parliamentary elections later this month in Catalonia, where pro-independence parties are tipped to win the majority of seats.
"There is political risk in Greece, Spain, Catalonia and Portugal," Barclays chief European economist, Antonio Garcia Pascual, told CNBC earlier this week.
"Growth is improving, domestic demand is okay, but investment is the big question mark here."
Developments in Greece – where the anti-austerity Syriza party came to power at the start of the year – have probably been watched closely by euro zone peers going to the polls this year, analysts said.
Greek voters return to the polls on September 20, after the country's former prime minister, Alexis Tsipras, called a snap election in the hope of winning a stronger mandate to improve the terms of a bailout agreement for the debt-struck country.
"The lesson is that even if you have gone through pain and get your budget deficit down, if you have high debt levels, you remain vulnerable to market and political pressures," said Jonathan Loynes, chief European economist at Capital Economics.
Like Greece, both Spain and Portugal introduced tough austerity measures in the wake of the global financial crisis to get their economies back on track. And while both countries are now on the mend, unemployment and debt levels remain high.
Spain's unemployment rate, for instance, is at about 22.5 percent – the second highest in the 19-country euro area after Greece.
Portugal, meanwhile, has a debt-to-gross domestic product (GDP) ratio of about 130 percent – one of the highest in the euro zone.
"It's better to invest in something that is weak and improving (like Spain) than something that is strong and stable. So, I'd rather invest in that market," Hans Stoter, chief investment officer at NN Investment Partners, told CNBC on Thursday.
"Also, from a government bond market perspective, the European Central Bank possibly stepping up into the next gear of QE (quantitative easing) would be positive for peripheral spreads."
A poll released this week suggested for the first time that the center-right coalition in Portugal could return to power in an election scheduled for October 4, Reuters reported. All prior polls had shown a tight gap between the country's two main parties.
In Spain, the uncertainty is more marked. The country's two main political parties – the ruling center-right People's Party and the opposition Socialists have lost ground to new populist parties – Ciudadanos and the left-wing Podemos.
Prime Minister Mariano Rajoy suggested to local media last week that national elections will probably take place on December 20.
"The political scene in Spain is in flux and there is considerable uncertainty regarding the election outcome," said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London.
"Just because Podemos has lost support partly due to events in Greece does not mean the two establishment parties can afford to be complacent. Fragmentation is the watchword in Spanish politics and the result of the Catalan election will only add to the uncertainty."
Friday is Catalan National Day and tens of thousands are expected to descend on the capital to demand independence, highlighting the political risks facing Spain.
Spiro added that markets had underpriced political risk in Spain for some time.
Spanish yields have fallen about 30 basis points from a peak in June amid heightened fears of a Greek exit from the euro zone. When a yield falls, the price rises, implying there is less risk attached to holding that bond than before.
"The political landscape in Spain is shifting significantly but it's still unclear which parties will form the next government," said Spiro.