EURO DOOM: Interest Rates on Portuguese & Greek Bonds Soar to Record Highs

Bonds of Europe’s most-indebted nations fell, sending Portuguese and Greek yields to records, on concern countries will restructure debt.

[link to www.bloomberg.com]

----- Portugal’s five-year yields climbed as high as 10.49 percent, while the Greek 10-year yield topped 13 percent for the first time since at least 1998.

----- Credit swaps on Greece signaled a 60 percent chance of a default within five years.

----- Bondholders may see a 50 percent to 70 percent “haircut” on their Greek securities if the nation restructures its debt, said Moritz Kraemer, head of S&P’s European debt evaluation team.

----- “That Greece may have no other alternative but to restructure in order to get itself back on the sustainable debt path is probably the worst kept secret,” said Greg Venizelos, a credit strategist at BNP Paribas SA in London.

----- The extra yield investors demand to hold Portuguese 10-year bonds instead of benchmark German bunds widened to a euro-era record 550 basis points, with the Greek-German spread increasing 37 basis points to 985 basis points.

----- Greek two-year yields jumped 91 basis points, taking this week’s advance to 157 basis points. Yields on Spanish 10-year debt jumped nine basis points, with Irish yields 21 basis points higher. The 10-year bund yield slid three basis points to 3.40 percent.

----- German Finance Minister Wolfgang Schaeuble told Die Welt newspaper that Greece may need to renegotiate its debt burden if an audit in June questions its ability to pay creditors.