In early April, about 15 percent of 779 emerging market bonds analyzed by U.S.-based research house Gimme Credit were considered distressed, indicating yields are 1,000 basis points above U.S. Treasuries with comparable maturities.
Of the 115 distressed bonds, 29 were in basic industries, including metals and mining, building and construction and steel producers, while 24 were energy names.
"Relative Allure"
Many investors will point out that default rates for U.S. high yield names are higher, at 4.6 percent, and are forecast by ratings agency Moody's to hit 6 percent by year-end.
That "improves the allure of emerging high-yield debt on a relative basis," ICBC Standard Bank said.
Brazilian credits in particular have rallied hard, helped by the recovery in commodity prices and the prospect that left-wing President Dilma Rousseff will be impeached, potentially opening the way for a more business-friendly administration.
That is despite the fact that Brazil's high-yield default rate is around 6.6 percent, according to the Standard Bank note.
Even non-commodity names, such as airline Gol and mobile operator Oi, are looking to renegotiate their debts.
Brazilian names that have rebounded include steel and iron ore producer Cia Siderúrgica Nacional and Samarco Mineração, an iron ore pellet producer. Samarco is still awaiting authorisation to resume iron ore mining operations at the site of a dam burst that killed 19 people.
Their bonds have almost doubled in price, although yields remain in the double digits .