Corporate bond spreads in emerging markets are influenced by factors like firm-specific variables, bond characteristics, macroeconomic conditions, country-specific sovereign risk, and global factors. Firm-level performance indicators play a significant role in determining these spreads. Spreads increase more sharply in response to higher sovereign and global risks compared to decreases. This suggests that sovereign risk remains a key factor in determining corporate risk, even though credit rating agencies have started rating corporations independently of sovereign ratings. Panics are common in emerging markets due to investors being less informed and more likely to follow the crowd.