ICE Capital focuses on financial inter-mediation seeking to match international investor risk appetite with domestic funding needs in frontier markets, in terms of the principal components of the value chain originating, structuring and distributing frontier market risk transactions.
Frontier Markets Overview
Frontier markets are early-stage emerging markets and are mostly characterised by rapid, but volatile GDP growth with significant and increasing funding needs. These markets often present unique investment opportunities driven by structural reforms, expanding populations, and rising consumer demand.
FX Challenges & Solutions
Some corporates in frontier markets are able to tap international capital markets, but only in hard currency. This exposes local borrowers to FX mismatches, as they borrow in hard currency and their assets are local currency. This is the gap Frontero looks for solving.
Local Currency Funding
Frontera Capital provides long-term local currency funding and FX hedging products to both lenders and borrowers. These solutions help reduce exposure to exchange rate volatility and support more stable financial planning. By offering tailored products for frontier markets, Frontera Capital enables institutions to access sustainable funding while managing risk effectively.
Secondary Markets Development
Frontera Capital contributes to creating secondary markets for loans issued by financial institutions in emerging markets. This strengthens market liquidity by allowing lenders to redistribute risk and unlock capital for new lending. As a result, financial institutions can expand their lending capacity while promoting deeper and more efficient financial markets.
Frontier markets are typically pursued by investors seeking high, long-term returns and low correlations with other global markets. These markets often provide unique diversification benefits because their economic cycles and financial systems operate independently from larger, more developed economies. As a result, they can help reduce overall portfolio volatility while enhancing return potential for investors with a long investment horizon. For many institutional investors, frontier markets represent an opportunity to access early-stage growth, untapped sectors, and rising consumer demand long before these economies transition into mainstream emerging markets.
Frontier markets are more organized as an asset class in listed equities than in fixed income markets, largely because equities benefit from clearer and more standardized qualification criteria for inclusion in ‘investable’ indices, most notably the MSCI suite of frontier market indices. This structured classification system gives equity investors a more transparent framework for assessing country eligibility, monitoring market developments, and comparing performance across regions. By contrast, fixed income markets in frontier economies tend to be more fragmented, less liquid, and heavily influenced by local regulations, which limits the creation of broad, consistent benchmarks. The absence of uniform issuance practices, varying levels of credit quality, and inconsistent disclosure standards often makes it difficult to group frontier market bonds into a cohesive, globally recognized asset class. As a result, international investors have historically found it easier to access frontier equities than to build diversified fixed income portfolios in these markets. Over time, however, as more countries improve their debt management frameworks, enhance transparency, and deepen their domestic bond markets, frontier fixed income may gradually develop the structure and visibility that equity markets already possess.
Frontier markets are considered ‘investable’, but they typically have much lower bond and equity market capitalisation, reduced liquidity, and limited trading turnover compared to more established emerging markets. These structural constraints often lead to higher transaction costs, wider bid–ask spreads, and greater vulnerability to sudden external shocks or shifts in global investor sentiment. Despite these challenges, frontier markets offer compelling long-term opportunities for investors who are willing to take a strategic approach and manage the inherent risks. Their rapidly growing economies, expanding populations, ongoing structural reforms, and increasing financial integration create a foundation for strong future returns and meaningful portfolio diversification.
The implication of a country being labeled as frontier is that, over time, its market is expected to become more liquid and eventually display risk and return characteristics similar to those of larger, more established emerging markets. This classification signals that the country is on a development path where economic reforms, financial sector improvements, and increased investor participation are likely to strengthen market depth and stability. As these structural upgrades take hold, trading volumes generally rise, transparency improves, and investor confidence grows, creating conditions that support more efficient capital allocation. Over the long term, this progression can help frontier markets integrate more fully into global financial systems and attract larger pools of international investment. Ultimately, the frontier designation serves as both a reflection of current limitations and an indicator of a country’s potential to evolve into a more mature, competitive, and resilient investment destination.
Frontier markets are mostly characterized by rapid GDP growth and, as a result, rising funding needs. By matching investment demand with supply, Frontera Capital is able to bridge this funding gap and, in so doing, help to deepen local currency sovereign debt markets; provide local corporates access to the international capital markets and facilitate financing of infrastructure projects.
On the demand side, a quest for both diversification (to reduce portfolio beta) and yield (to enhance portfolio alpha) will likely see more investors allocating capital ‘down the risk curve’ into sovereign local currency funding as well as corporate financing opportunities and more direct infrastructure funding that have hitherto not been generally available given that these frontier market sectors are relatively undeveloped.
On the supply side, Frontera Capital leverages its expertise and network to connect international investors with frontier market opportunities, efficiently channeling capital where it is most needed. By providing structured investment vehicles and advisory support, the firm helps mitigate the risks typically associated with frontier markets, including currency volatility, regulatory uncertainty, and lower market liquidity. This enables both local and foreign participants to engage confidently, creating a more stable and predictable funding environment.
Moreover, by actively participating in market development, Frontera Capital contributes to the establishment of robust financial infrastructure. This includes improving transparency, promoting standardized market practices, and supporting the creation of benchmark instruments.
