NEW YORK (TheStreet) -- The European Union may have sold its bailout plan to the Greek government, but whether investors will buy into the rescue remains to be seen.
Greece's creditors are still chilly toward the idea of a haircut or other debt-restructuring techniques as long as the country stays in the eurozone. With those adjustments not likely in the immediate future, investors will have to figure out how to proceed while the austerity measures the bailout requires are implemented.
"The question for the markets is 'How are they going to be able to live with the debt if the debt is not renegotiated?'" said Quincy Krosby, a market strategist at Prudential Financial.
There are some bellwethers to watch: One of the them is the euro, which was trading down 2.77% for the week at $1.0848 at midday on Friday. The EU currency could go even lower, Krosby said, if calls for modifications to the terms of Greece's debt -- including the lengthening of repayment periods and lowering interest rates -- continue to go unacknowledged by the EU.
Another way to gauge investor reaction will be the yields of bonds issued by banks in other southern European nations -- in particular, Spain, Portugal and Italy. "That will determine where sentiment is going," Krosby said. "If yields start spreading, it's telling you that the market thinks this won't be an easy transition for Greece."
After this week's Herculean task of pushing a proposal for a $96 billion bailout through his parliament, Greek Prime Minister Alexis Tsipras may face an even greater challenge next week -- that of keeping his job as head of the leftist Syriza party -- amid anger about the proposal's austerity measures.
While the parliament will likely meet a Tuesday deadline to approve some details of the plan, including how it will set up a €50 billion-fund to sell Greek government assets, unrest within Syriza could drive Tsipras out of office.
The EU and other advocates of the bailout would then need to hope that someone "who can implement the measures" emerges as the leader of parliament, Krosby said. Otherwise, implementation of the plan would be in jeopardy.
Only when the entire package of reforms is implemented can investors "begin to breathe a sigh of relief," said Todd Salamone, senior vice president at Schaeffer's Investment Research.
But even if the bailout is negotiated and fully implemented, some analysts said they were still skeptical that it would improve the Greek economy. "Without a path to growth and recovery, there is no path to debt sustainability for Greece and the deal just announced doesn't change this fact," MKM Partners chief economist Michael Darda wrote in a note.
For example, just as Greece's gross domestic product was recovering from a 12% fall over the last five years, the Greek government shut down the country's financial system. That put new downward pressure on domestic production, something that the current bailout plan does not address, Darda said.