Nov. 13 (Bloomberg) -- Ecuador's bonds plunged amid speculation the government will miss a $30 million interest payment in two days on its benchmark dollar bonds due in 2012.

The yield on the 12 percent securities soared 25 percentage points to 69.28 percent at 5:36 p.m. in New York, according to JPMorgan Chase & Co. The price on the $510 million bond sank 17 cents to 25 cents on the dollar.

The South American country's finances have been squeezed by a tumble in oil, its biggest export, adding to concern that President Rafael Correa will follow through with default threats he first made during the 2006 campaign.

``There's fear that they will not pay the coupon,'' said Claudia Calich, who manages $1 billion in emerging-market debt for Invesco Inc. in New York.

Finance Ministry spokesman Pablo Suarez declined to comment today on whether the government will make the payment this week. Finance Minister Maria Elsa Viteri is scheduled to speak about the country's debt at a news conference tomorrow morning, Suarez said. He didn't provide more details on the news conference.

The extra yield investors demand to own Ecuador's debt instead of U.S. Treasuries surged 1.62 percentage points to 31.91 percentage points, according to JPMorgan's EMBI+ Index. The spread on emerging-market debt overall was unchanged at 6.53 percentage points, according to JPMorgan.

As recently as Sept. 29, Correa said his government may not pay debt deemed ``illegitimate'' by an auditing committee.

`Makes No Sense'

Correa told reporters in Quito that day that Ecuador would halt payments if the audit finds the debt was sold illegally. Correa, a 45-year-old economist with a Ph.D. from the University of Illinois at Urbana-Champaign, said the government would meet payments on other obligations so long as social or education budgets are not at risk.

Crude oil, which accounts for more than half of Ecuador's exports, has tumbled 60 percent from a record high in July as the worst financial crisis since the Great Depression deepened a global economic slowdown. Ecuador still has enough cash to meet debt payments, Alberto Ramos, an economist at Goldman Sachs Group Inc. in New York.

``From a financing perspective, it makes no sense to default,'' Ramos said.

To contact the reporter on this story: Lester Pimentel in New York at lpimentel1@bloomberg.net

Last Updated: November 13, 2008 18:16 EST