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This article analyses the consequences of the narrative construction of the group of countries that has been grouped as "PIIGS" (Portugal, Ireland, Italy, Greece and Spain) for their sovereign debt risk rating.Acronyms for groups of countries can provide a useful shorthand to capture emergent similarities in economic profile and prospects. But they can also lead to misleading narratives, since the grounds for use of these terms as heuristic devices are usually not well elaborated. This article examines the process whereby the "PIIGS" group came into being, traces how Ireland became a member of this grouping, and assesses the merits of classifying these countries together. The contention is that the repetition of the acronym in public debate did indeed shape the behaviour of market actors toward these countries. It is argued that this involved a co-constituting process: similarities in market treatment drives PIIGS usage, which in turn promotes further similarities in market treatment. Evidence is found of Granger causality, such that increased media usage of the term "PIIGS" is followed by increased changes in Irish bond yields.
This demonstrates the constitutive role of perceptions and discourse in interpreting the significance of economic fundamentals.The use of acronyms as heuristics has potentially far-reaching consequences in the financial markets.
