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Irish, Portuguese Bond Yield Spreads to Bunds Widen to Records

Irish and Portuguese government bonds fell, pushing the yields on 10-year securities to records versus benchmark German bunds, on concern European banks are vulnerable to losses on their holdings of so-called peripheral euro-region debt.

The extra yield investors demand to hold Greek 10-year government bonds rather than benchmark bunds reached the highest level in four months. Pacific Investment Management Co. fund manager Andrew Bosomworth said yesterday the Mediterranean nation faces a “substantial” default risk when its bailout program expires in three years. The Wall Street Journal said European stress tests of major banks understated some holdings of sovereign debt in the wake of Greece’s budget crisis.