Emerging market bonds are riding high. Despite the recent retreat to safety in global markets, which has emerging market equities quite hard, emerging bonds, investors have retained their appetite for emerging bonds.

But for how long? On ft.com and in Friday’s print FT, Geoff Blanning, head of emerging market debt at Schroders, argues that emerging market bonds are set for a sharp correction. He won’t call it a crash, but he comes very close.

Chris Tuffey, on the sell side as co-head of the credit capital markets group for Europe, the Middle East and Africa at Credit Suisse, takes the opposite view. Emerging market bonds, he says, are worth the money because they offer a better risk/reward combination than developed world issues. The world economy is tilting towards the emerging markets – and with it the terms that emerging market borrowers can secure.

The next few months will show who is right. Continue reading »