Greek bond yields pass 7% as worries return

Greek government bond yields shot up on Tuesday, amid growing concerns about Athens' plans to leave its bailout program ahead of schedule.

The yield on benchmark 10-year notes hit 7.118 percent on Tuesday morning, passing the 7 percent mark for the first time since March.


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Read MoreGreece plans new bond sales, confirms 2015 growth target

It comes after Prime Minister Antonis Samaras won a confidence vote in parliament early Saturday, with the backing of all 155 conservative and Socialist lawmakers in his coalition. He called the poll to force lawmakers to back his plans to exit its international bailout program ahead of schedule.

Greece is hoping to leave its bailout program early and meet its funding needs through the debt markets, rather than call on the "Troika" organizations running Greece's bailout program– the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) —for more assistance.

The country was one of the first in Europe to be hit by the global financial crisis of 2008 and the full scope of its problems helped spark the euro zone sovereign debt crisis. Greece needed to be bailed out by the IMF and EU to the tune of 240 billion euro ($304 billion) and was required to impose a tough – and hugely unpopular – austerity program. It now hopes to leave the program before its scheduled end in 2016 without further assistance, after years of crippling recession.

The latest developments out of Greece have rattled investor confidence and hit ASE, Athens' benchmark index, hard. It was trading around 4.5 percent lower on Thursday morning.

Investors' bet on Greece will succeed: Fin Min
Investors' bet on Greece will succeed: Fin Min   

Although very few investors are buying long-dated Greek sovereign debt at the moment, the yield on the 10-year bond is still seen as an indicator of investor sentiment in the country.

Sarah Pemberton, European economist at Capital Economics, said Greece's government was under pressure to exit its bailout early given the growing popularity of Syriza, the leftwing anti-bailout political party.

Read MoreGreece rejects bailout talk, eyes growth

"But the economic case is very unconvincing that Greece is able to support itself," she told CNBC, highlighting concerns that it would not be able to return to market without increasing its debt financing costs.

"Economic indicators show that the third quarter might be Greece's first quarter of positive growth, but it's in a very vulnerable positon and any negative market reaction could prolong its time in recession," Pemberton added.

Read MoreGreek PM wins confidence vote in parliament

Samaras' government has also been plagued by the prospect of snap elections early next year if the prime minister fails to gain the support of opposition lawmakers for his candidate for president. A promise to exit the painful program early was key in securing that backing.

"We don't have buyers in the Greek bond market because of the political risk, the possibility of snap elections in early 2015," a bond trader at a major Greek bank told Reuters.

- By CNBC's Katrina Bishop. CNBC's Nefeli Agkyridou also contributed to this report.