**Greece must now seek financial aid from the EU and International Monetary Fund (IMF) in order to rescue its finances, investors have warned.**The calls follow the loss of investor confidence on the bond markets this week, which has increased Greece’s cost of borrowing.
The Greek government currently plans to fix its finances through austerity measures and borrowing.
But investors say a bail-out is now increasingly likely.
“Now is the time to put some money on the table,” John Stopford, co-head of fixed income at Investec, told the BBC.
“We are getting down to two options - an IMF package of financial support or organised debt restructuring.”
Bond market troubles
His comments were echoed in a note issued by Nomura Securities, which said it was “increasingly likely” that the Greek government will ask for a rescue.
“And we expect it will get it from its European partners and the IMF,” Nomura said, saying that market conditions made the current strategy of borrowing their way out of trouble unfeasible.
On Thursday, interest rates charged by investors to the Greek government rose to their highest level since the introduction of the euro.
They have since fallen back slightly, but remain significantly higher than rates charged to Germany - seen as the safest of the European economies.
Last month the EU and IMF announced plans to provide a 22bn-euro (£20bn; $29.5bn) safety net that could be drawn on should Greece be unable to raise the funds it needs on the financial markets.
But the Greek government has so far sought to avoid taking any money, and the lack of detail in the bail-out plan has also worried investors.
“The EU hoped the promise of intervention would be enough to reassure the markets,” Investec’s John Stopford said.
"But [investors] can see where the holes are.
“The market is looking for clearer announcements of the plan going forward and how the rescue plan will work and how the money will be accessed.”
Reports suggest Greece is now planning to sell US dollar-denominated bonds to emerging market investors as an alternative way of raising money.
But bond market traders doubt the move will work to instil confidence back into the market, due to the size of the financial problems facing Greece.
But David Bloom, senior currency strategist at HSBC is more optimistic over Greece’s prospects, calling the reaction of the markets “completely exaggerated”.
“This is the storm that will not pass,” he said.
"The market is concerned about contagion. I think Greece will take the austerity measures needed and things will calm down."This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.