The cost to insure Irelandís debt climbed to a record, leading a surge in European sovereign credit-default swaps, on concern Anglo Irish Bank Corp. wonít pay back bondholders in full.

Contracts on Ireland jumped 23 basis points to 487 basis points at 12:50 p.m. in London, according to data provider CMA. Swaps on subordinated debt of Anglo Irish, which was nationalized last year, now cost 5 million euros ($6.7 million) in advance and 500,000 euros annually to insure 10 million euros of debt for five years.

Investors are fleeing Irish bonds on concern bank bailout costs and a shrinking economy will hurt efforts to tame the European Unionís biggest budget deficit. Government guarantees covering some of the subordinated debt sold by the nationís banks come to an end next week, while Irish Central Bank Governor Patrick Honohan said in June he didnít know if junior bondholders in Anglo Irish will be ďmade whole.Ē

Ireland Credit Risk Jumps to Record on Anglo Bondholder Concern - Bloomberg

I can hear the bank playing as the ship goes down.

We have turned a corner!