Local risk free rate for emerging market

With regards to calculating the pre tax cost of debt, is the local risk free rate for emerging market the local ten year gov bonds or is it calculated by 10 yr US gov bond + (inflation differential of the two countries)?

2nd one.

You will use local risk-free rate, but it is re-calculated from 10yr US gov bond + change in Inflation.

Its pretty hard to imagine that the 10 year of an emerging market government is risk free right?

heh just to make sure u know, wont want to second guess myself during d-day itself. Thanks for the input rockmania!