Investors are buying emerging-market bonds as the fundamentals are deteriorating. When the returns on cash and government bonds in the developed world are zero, or even negative, it is hardly surprising that investors are casting their nets more widely. In the process the “search for yield”, as it has been called, has inevitably turned its attention to emerging markets. One or two decades ago, emerging-market sovereign debt might have been the only beneficiary of these flows. But government bonds do not offer such a juicy return these days; the yields on ten-year bonds issued by Malaysia and the Philippines, for example, are around 3.6%. […]