unwanted entity decode on email address

Recently I was not receiving emails from the website but these were present in email log and there was nothing suspicious about them. After lengthy investigation i found out that wp_mail function was called with recipient email address having entity escaped ‘at sign’ so instead of @ it had @ in it. The problem is that email log decodes this entities and shows the address misleading where neither wp_mail nor phpmailer decodes entities in address so email is never send.