If there is a bubble in emerging market debt, it probably has several years of expansion ahead before it bursts or is let down more gradually. By most definitions this would not constitute a bubble.

Emerging debt offers institutional investors medium to low volatility with high returns, counter-cyclicality to the US and global business cycles and negative correlations to fixed income. Since 1998 the pattern of financial contagion from one emerging market to another has been consigned to history. Most trade and investment links are north-south, not south-south. The irrational behaviour of emerging markets' contagion before 1998 has disappeared, as investors have shifted from speculative buyers towards institutional investors. For example, just as Argentina's default in 2001 caused a slight rally elsewhere, so the country's recent threat to go into arrears with the IMF – albeit not brought to fruition – made good headlines but had no impact on the market.