Fears rise for Greek default

Greece's borrowing costs spiked to a record high Thursday, intensifying the country's debt crisis.

The interest rate gap, or spread, between Greek 10-year government bonds and the German equivalent stood at 448 basis points in the early afternoon trading, the highest level since Greece joined the euro in 2001.

The higher interest rates demanded by bond investors are potential poison for the Greek budget; unless they fall, the government will pay a massive premium to borrow and face a vicious cycle where higher borrowing costs fuel default fears.

Jean-Claude Trichet, President of the European Central Bank (ECB) addresses the media during his monthly news conference at the ECB headquarters in Frankfurt, April 8, 2010. REUTERS/Kai Pfaffenbach