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Emerging market bonds, too, have suffered.
"Emerging market bonds are attractive relative to developed markets".
Investors have sold emerging market bonds and relatively risky currencies like the Australian dollar.
A collapse in emerging market bonds would further damage the weak balance sheets of American banks.
Emerging market bonds, excluding Argentina, had a total return of 19.8percentt in 2001.
Emerging market bonds would decline, so developing countries would find it more expensive to borrow money.
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Index E.T.F.'s investing in emerging-market bonds are available.
Emerging-market bonds and shares, for instance, may jitter further.
Hedge funds own mortgages, junk bonds and emerging-market bonds.
Argentina's debt represents 25percentt of all emerging-market bonds.
Emerging-market bonds could be part of that allocation for risk-tolerant investors, Mr. Philips said.
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