Bond sales by emerging market borrowers dipped 15 percent in the first three months of 2019 from the same year-ago period and the outlook for the coming months is clouded by choppy markets, global recession fears and another financial crisis in Turkey.
But borrowers nimble enough to negotiate the market during the first quarter were rewarded by robust demand from investors in search of high-yielding but riskier bets.
A debut international issue for Benin and a $3 billion bond sale for Ghana, the world's second-largest cocoa producer, were both well-received by investors.
Gulf rivals Qatar and Saudi Arabia too got away bumper issues, of $12 billion and $7.5 billion, respectively.
Turkey, now in the throes of financial market turmoil, tapped the market for $2 billion in January.
Debt sales by governments and companies in emerging markets fell to $162.03 billion in the period to March 31, compared to $190.11 billion over the same period in 2018, data from Refinitiv showed. The number of deals declined to 249 from 279.
"Do I think the markets will be selective? Of course," said Christopher Marks, managing director and head of emerging markets, EMEA, at Mitsubishi UFJ Financial Group.
"But the markets are not shut and technically it should be the case that they will continue to be open. People will have to make the case in their own minds that some of these African jurisdictions and others are not necessarily perfectly correlated with some of the growth concerns in the US."
J.P Morgan expects supply this year to be tight, with net issuance - after taking into account maturing debt and coupon payments - at just $13 billion versus $19 billion last year.
And with plenty of investors still sitting on piles of cash, there is a captive audience.
"Very, very little issuance is expected," said Diana Amoa, emerging market debt portfolio manager, J.P Morgan Asset Management.
"So when a name like Ghana is coming to the market, it is natural that investors think 'this may be the last chance to see these sort of yielding assets coming into this space', and you have inflows."
Order books for Ghana's $3 billion bond were a bulging $21 billion - the highest ever for a sub-Saharan African bond sale.
Around $53.4 billion flowed into emerging market debt in the first two months of 2019, according to the Institute of International Finance.
Turkey's 2018 currency rout and Argentina's debt crisis, along with the prospect of rising borrowing costs and slowing global growth, inflicted much pain on emerging market last year. The J.P Morgan benchmark index of hard-currency emerging market bonds fell some 4.5 percent last year.
This year, governments and companies have been more prudent in their issuance policy as they seek to better control their leverage levels, say bankers.
Demand is also driven by investors searching for returns above inflation at a time when yields on US treasuries have sunk lower and those on German benchmark bonds crashed back below zero on concern that advanced economies might be sliding into recession.
"We're in the scramble for yield in this vol compressed world," said Michael Guichon, emerging markets macroeconomic analyst at UBS.
"Its playing out if you look at where emerging markets funds are investing. Benin priced a bond recently and it harkens back to 2014 when Zambia priced at similarly strong levels. That bond went from par to 70 over the course of a couple of years."
He was referring to Zambia's debut Eurobond in 2012 that received $12 billion in orders at the height of the frenzy for emerging market assets.
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