Fannie Mae and Freddie Mac shares tumbled in New York trading to the lowest levels since at least 1990 and the bonds rose as speculation increased that the U.S. Treasury will bail out the mortgage-finance companies, wiping out shareholders.

Fannie, based in Washington, slumped 27% and McLean, Va.-based Freddie dropped 22%, extending its losses to 90% for the year. The companies’ debt yields fell the most in a month against benchmarks in anticipation that the government would fully support the bonds in any rescue.

“Using taxpayer money to bail them out looks like it’s becoming reality now,” the senior trader at U.S. Global Investors Inc., which manages $5 billion in San Antonio, Michael Nasto, said. “That’s going to leave the shareholders holding worthless paper.”

Rising borrowing costs and evidence that demand for their debt was waning last month led Treasury Secretary Paulson to seek the authority to pump unlimited amounts of capital in Fannie and Freddie in an emergency. Freddie paid its highest yields over U.S. Treasuries on record in a debt sale yesterday amid concern that credit losses are depleting the capital of the beleaguered mortgage-finance companies.

Fannie and Freddie have $223 billion of bonds due by the end of the quarter and their success in rolling over that debt may determine whether they can avoid a federal bailout. Fannie has about $120 billion of debt maturing through September 30, while Freddie has $103 billion, according to figures provided by the government-chartered companies and data compiled by Bloomberg.

Rolling over the debt “is the single most important factor to their ability to remain liquid,” an analyst at Credit Suisse in New York, Moshe Orenbuch, said. “So far, they’ve been able to do that.”

Fannie declined $1.61 to $4.40, the lowest since 1989, in New York after falling as low as $3.95. Freddie dropped 92 cents to $3.25, the lowest level since 1990, and earlier fell to $2.95.