Greek, Portuguese Bonds Drop as Debt Crisis Escalates

Government bonds of the euro region’s most indebted nations slumped, led by the biggest drop for Greek two-year notes since at least 1998, as credit downgrades escalated Europe’s sovereign-debt crisis., Bloomberg 4/27/2010 12:29:47 PM

Portuguese, Spanish, Irish and Italian securities plunged and German debt rallied as investors sought safer assets after Standard & Poor’s Ratings Services cut Greece three levels to BB+, or junk, and lowered Portugal two steps to A-. Greek notes slid earlier as concern deepened that the nation will ask investors to accept delayed or reduced debt payments.

The yield on the Greek benchmark two-year note rose 478 basis points to 18.71 percent as of 4:51 p.m. in London. The 4.3 percent security due March 2012 fell 6.20, or 62 euros per 1,000-euro ($1,326) face amount, to 78.67. The yield on the 10- year bond climbed 69 basis points to 10.29 percent. The yields are the most since Bloomberg began collecting the data in 1998.

Portuguese two-year note yields jumped 117 basis points to 5.36 percent and Ireland’s two-year note yield rose 75 basis points to 3.93 percent.

Italian two-year notes slumped, pushing the yield up 31 basis points to 1.82 percent, the most since February. The yield on Spanish two-year notes rose 15 basis points to 2.11 percent.

The yield on the two-year German note fell to a record-low 0.77 percent. The yield on the 10-year bund, Europe’s benchmark government security, dropped 11 basis points to 2.94 percent.