March 10 (Bloomberg) -- Emerging-market bonds fell, sending yield premiums over U.S. Treasuries to their widest since July 2005, on speculation Bear Stearns Cos. lacks sufficient access to capital, drying up demand for higher-yielding assets.

The extra yield investors demand to own emerging-market bonds over Treasuries swelled 7 basis points to 3.03 percentage points at 4:05 p.m. in New York, according to JPMorgan Chase & Co.'s EMBI Plus index. A basis point equals 0.01 percentage point.

``The Bear Stearns news makes things that much more uncertain,'' said Cathy Hepworth, who helps manage more than $7 billion of emerging-market securities for Prudential Financial Inc. in Newark, New Jersey.

Shares of Bear fell as much as 13 percent in New York trading, the most since the 1987 stock market crash, as credit default swaps on the company surged. The world's largest banks and securities firms wrote down $188 billion of assets linked to the subprime mortgage market. Russell Sherman, a spokesman for Bear, said there is ``no truth to the liquidity rumors.''

Argentine bonds, among the highest yielding in emerging markets, led losses. The yield on Argentina's benchmark 8.28 percent dollar bonds due in 2033 climbed 8 basis points to 9.59 percent, according to JPMorgan. The bond's price dropped 0.75 cent on the dollar to 86.75 cents.

The risk of owning Venezuelan bonds declined increases today, according to Bloomberg data. Five-year credit default swaps based on the country's debt climbed 4 basis points to 629 basis points, the highest since July 2004. That means it costs $629,000 to protect $10 million of the country's debt from default.

Credit default swaps on Bear Stearns, used to protect corporate bonds from default, jumped 246 basis points to 792 basis points, according to prices for one-year contracts from CMA Datavision.

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

Last Updated: March 10, 2008 16:26 EDT