The yield on Greek government bonds hit its worst level since Greece joined the euro zone this evening, reflecting the country's low credibility on international financial markets.

The yields on Greek bonds, a closely watched indicator of how expensive it is for a country to borrow money, peaked at 6.32% after the government said it would sell up to €5 billion of bonds through a group of banks.

It was the highest level since 2000, before Greece adopted the euro in 2001. The interest-rate spread between Greek and German 10-year bonds also widened to 3.12 percentage points. Ireland's spread was around 1.5 points.

This spread means that Greece has to spend much more than Germany to attract lenders to finance its overspending.

Greece has been hit by three credit downgrades in reaction to concerns over the country's huge debt and public deficit, which reached 12.7% of output last year, far above the 3% limit for euro zone members.

The socialist government, which was elected in October, has since proposed a three-year crisis plan to slash the deficit to 2.8% of output in 2012.