Supposedly this move was made to "avoid unsettling investors in larger countries and sparking a new round of market contagion."
In reality, the action was mandated theft, imposed by EU officials to protect senior bondholders.
How can such an action do anything but cause contagion?
This can cause more Oy-R panic as the negative sum game to minimize losses means people need to get their money out ahead of the competition. Weak I-O policing means that illicit money is penalized the same as honest, a Gresham's dynamic then causes the honest money to continue to do worse by comparison. For example if a business sector is rife with fraud the more criminal Iv agents make more money, if the government just fines everybody with increased taxes to pay for the economic problems then this makes the honest businessmen even poorer and losing market share.