On the good news front: Asia is showing that EM are not being shut out of the global debt markets. Asian companies are leading what’s looking like a revival in risk appetite among debt investors, says Bloomberg. Corporate USD bond sales, particularly by high-yielding Asian borrowers, hit fresh highs in May as investors became more confident that the worst of the pandemic is behind us. The situation is still different in emerging Europe and elsewhere, but, if anything, Asia’s story means that as economies reopen, so will debt markets.

Beyond Asia, the USD debt market has been “more hesitant.” This is because Asian economies were hit earlier by the outbreak and are ahead of the curve in reopening their economies. Despite this, some investors are still buying high-yield debt, even in Latin America, where some countries are yet to see the infection rate peak. Brazil’s state-owned Petrobras sold USD 3.25 bn-worth of bonds last week, in a sign perhaps that junk-rated Latam corporate borrowers will start tapping the market soon.

This wave of optimism applies to the risky sovereign debt market too, the business information service notes, citing Egypt’s successful USD 5 bn eurobond sale last month as an example. South Africa, Brazil and Ukraine are likely to follow suit if risk appetite continues to increase.

But we haven’t yet returned to normality: Investor sentiment remains in a fragile state due to the continuing spread of the virus and the increasing trade tensions between the US and China, Trieu Pham , EM credit strategy analyst at ING, wrote in a blog post. “Not all issuers will find it as easy as Egypt which has gained a lot of investor recognition … We believe that investors will remain highly selective when it comes to non-investment grade issuers,” he wrote.