Emerging-market credit liquidity is evolving through increased fixed-income inflows, shifting investor participation, and the adoption of new execution tools.
This transition is critical because the rise of non-bank capital and geopolitical shocks are changing how governments and firms in emerging markets secure funding. As traditional banking structures shift, market participants must adapt their strategies to maintain stability and access.
Meridy Cleary of the FICC Market Structure and Liquidity Strategy team and James Banghart, Global Head of Emerging Market Credit Trading at J.P. Morgan, discussed these trends in a recent interview. They said portfolio-trading and ETF execution are becoming primary methods for clients to navigate the current environment.
Banghart said, "Our portfolio-trading and ETF capabilities allow clients to access EM credit more efficiently in today’s liquidity environment."
These shifts occur alongside broader global trends. Data from the Bank for International Settlements indicated that global liquidity improved in the third quarter of 2024 [1], as total credit expanded. However, this general improvement contrasts with specific risks facing emerging markets.
An April 7, 2026, report from the International Monetary Fund noted that emerging-market firms and governments are increasingly relying on non-bank sources for funding [2]. While this provides new avenues for capital, the IMF said that this trend brings both benefits and new challenges [2].
Market participants are also seeing new trends in bond issuance within the U.S. and Europe. The availability of more granular data is allowing traders to better manage the volatility caused by recent geopolitical shocks. The combination of higher data availability and specialized execution tools is intended to offset the fragility associated with non-bank funding.
J.P. Morgan said that the integration of these tools allows for more precise liquidity management, a necessity as the investor base continues to diversify beyond traditional institutional holders.
“Emerging-market firms and governments are increasingly turning to non-bank sources for funding.”
The movement toward non-bank funding and ETF-based execution represents a structural shift in emerging market finance. While global liquidity may appear stable on a macro level, the reliance on non-bank capital can introduce higher volatility and different risk profiles compared to traditional bank lending. The industry's pivot toward portfolio trading suggests that speed and aggregation are now more valued than individual bond selection in these markets.
