German 10-year government bond yields reached the lowest this month amid speculation Greece won’t be able to avoid defaulting on its debt, boosting demand for the euro-region’s safest assets. Greece’s two- and 10-year bond yields reached euro-era records, even after officials said restructuring isn’t being discussed. Finland’s euro-skeptic bloc won support in yesterday’s election, as voters used the poll to protest against funding euro-region bailouts. Spain plans to auction 365- and 547-day Treasury bills today, while Belgium is scheduled to sell bonds due in 2013, 2021 and 2041. “Risk is one of the main drivers, with the restructuring debate moving to the front pages again and the Finnish election results not doing anything to deter those feelings,” said Christopher Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt. “We are looking for more gains in bunds and spread-widening of Belgium and Spain into this week’s auctions,” he said, referring to the difference in yield between the bonds and the benchmark German bund. The 10-year bund yield fell three basis points to 3.35 percent as of 8:57 a.m. in London. It earlier slipped to 3.33 percent, the lowest since March 31. Two-year yields were two basis points lower at 1.83 percent. No Debt Plan Greek 10-year government bond yields were 11 basis points higher at 13.93 percent, after rising to 13.94 percent, a euro- era record. Two-year note yields surged 41 basis points to a euro-era high 18.92 percent. The yield difference, or spread, between Greek 10-year bonds and German securities of a similar maturity widened to 1,059 basis points, the most since at least 1998, when Bloomberg began collecting the data. Portuguese five-year notes fell, pushing the yield five basis points higher to 10.63 percent, the highest since the introduction of the euro. The Mediterranean nation said it has no plans for a debt restructuring even as German officials openly discussed the possibility. “Restructuring is not an issue we’re discussing,” Greek Finance Minister George Papaconstantinou said in an April 16 Bloomberg News interview in Washington. “The pain and the cost” of doing so would be greater than repaying lenders, he told reporters the same day. German government bonds have handed investors a loss of 2.4 percent this year, according to indexes compiled by the European Federation of Financial Analysts Societies and Bloomberg, while Treasuries have returned 0.4 percent. Greek debt has lost 4.3 percent and Spanish debt has gained 1.8 percent, the indexes show. To contact the reporters on this story: Keith Jenkins in London at kjenkins3@bloomberg.net; Emma Charlton in London at echarlton1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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