Investors are edging back into bonds from the riskiest developing countries, even as they remain concerned about a string of defaults.

The spread, or extra yield, that investors demand to hold speculative-grade debt and tracked by a key emerging market bond index from JPMorgan Chase & Co. over US Treasurys narrowed to 8.5 percentage points on 4 June. The spread, which reflects borrowing costs in countries such as Bahrain and Sri Lanka, had blown up to 12 points in late March, topping the 11.6 points reached during the 2008 financial crisis.