Global debt markets demonstrated remarkable resilience during 2025 despite significant geopolitical tensions and ongoing international trade disputes. Governments and companies across the world borrowed a record twenty-seven trillion dollars according to a new OECD report OECD Global Debt Report 2026: Sustaining Debt Market Resilience Under Growing Pressure.
This high level of activity highlights the continued demand for capital in a complex and shifting global economic environment. Currently, the global bond market stands at one hundred and nine trillion dollars, representing ninety-three percent of world GDP. This figure shows a significant increase from 2015 when the market was only eighty-one percent of global production. Consequently, the OECD projects that borrowing will rise even further to twenty-nine trillion dollars during the year 2026.
The Evolution of the Global Bond Market
The OECD Global Debt Report 2026 emphasizes low levels of volatility and improving liquidity across the massive bond market. Improving liquidity and corporate spreads at near-historic lows have helped maintain market stability during these stressful periods of time. However, the report also points to significant changes occurring within the base of bond market investors. Specifically, there is a growing role for price-sensitive and leveraged investors who may leave markets more vulnerable to shocks.
These shifts in the investor base require governments to address volatility risks to safeguard future global financial stability. Furthermore, sound fiscal policies remain essential to enhance long-term debt sustainability while meeting growing public and private financing needs.
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Sovereign Borrowing Trends in OECD Countries
Sovereign bond issuance in OECD countries is projected to reach a record eighteen trillion dollars by the year 2026. This represents a massive increase from the twelve trillion dollars recorded in the year 2022 for these specific nations. Outstanding debt is estimated to have risen from fifty-five trillion in 2024 to sixty-one trillion by the end of 2025. While the debt-to-GDP ratio remained stable at eighty-three percent, it is projected to rise to eighty-five percent next year. Governments have responded to elevated real yields by shifting their issuance strategies toward significantly shorter maturities for their bonds. The share of issuance with a maturity over ten years reached its lowest point since 2009 for sovereign borrowers.
Emerging Markets and Developing Economies
In emerging markets and developing economies, sovereign borrowing from debt markets reached four trillion dollars during the year 2025. This brings the total debt stock in these regions to fourteen trillion dollars, or thirty percent of their GDP. This level represents the highest debt-to-GDP ratio for emerging markets recorded since the fiscal year of 2007. These nations face unique challenges as they attempt to manage their debt stocks while dealing with rising global interest rates.
The increased borrowing highlights the urgent need for development capital amidst the risks of slower global economic growth prospects. Therefore, maintaining market resilience in these areas is crucial for preventing a broader international financial crisis in the future.
Corporate Debt and the Artificial Intelligence Boom
Corporate borrowing reached its highest level ever in real terms during 2025 as companies sought to finance technological expansion. Total debt raised across corporate bond and syndicated loan markets hit thirteen point seven trillion dollars during this period. This volume surpassed the previous peak of thirteen point five trillion dollars that was recorded in the year 2021.
Outstanding corporate debt reached nearly sixty trillion dollars at the end of 2025, consisting of both bonds and loans. Given the scale of capital required for AI technology, corporate borrowing needs are expected to increase substantially going forward. Businesses are prioritizing the expansion of AI technology to stay competitive in an increasingly digital and automated global economy.
The Challenge of Rising Debt-Servicing Costs
Borrowing costs remain a primary concern for the OECD as higher interest rates begin to flow through the debt stock. Securities with an interest rate above four percent made up half of the outstanding investment-grade bonds at year-end. Furthermore, fifteen percent of non-investment grade bonds now cost eight percent or more for the companies that issued them.
This is a notable increase from 2021 when only ten percent of outstanding bonds carried such high interest rates. While corporates with fixed-rate structures have seen slower increases in expenditure, the shift toward higher spending is clearly visible. As low-cost debt reaches maturity, the trend of higher interest spending is expected to continue for many global borrowers.
The Vulnerability of a Shorter-Maturity Strategy
A critical analysis of the current debt landscape reveals a strategic trade-off that carries significant long-term risks for stability. By shifting toward shorter maturities, sovereign and corporate borrowers are temporarily mitigating their immediate interest expenditure during high-rate periods. However, this strategy creates a “refinancing cliff” where large amounts of debt must be renegotiated in the near future.
If interest rates remain elevated, these borrowers will be forced to lock in high costs for years to come. Additionally, the increasing reliance on leveraged investors adds a layer of fragility to the entire global bond market ecosystem. Any sudden market shock could trigger rapid sell-offs by these price-sensitive participants, leading to a severe liquidity crisis.
Q&A on Global Debt Resilience
Q: Why is corporate borrowing for AI technology expected to increase so substantially in the coming years? A: AI expansion requires massive capital expenditure for specialized hardware, data centers, and advanced software development to remain competitive globally.
Q: How have sovereign borrowers attempted to mitigate their rising interest expenditures during the year 2025?
A: Sovereign borrowers have responded by shifting their bond issuance towards shorter maturities to avoid locking in high long-term rates.
Q: What is the projected total borrowing for both governments and companies in the year 2026?
A: The OECD projects that total borrowing will rise further to twenty-nine trillion dollars driven by growing sovereign funding needs.
Q: What percentage of the world GDP does the global bond market currently represent according to the report?
A: The global bond market now stands at ninety-three percent of world GDP, which is a record high for the market.
Frequently Asked Questions (FAQ)
What was the total global borrowing amount in 2025?
Governments and companies borrowed a record total of twenty-seven trillion dollars according to the new OECD global debt report.
Which sector reached its highest borrowing level in real terms during 2025?
The corporate sector reached its highest level ever, raising thirteen point seven trillion dollars in bonds and syndicated loans.
Are interest rates for non-investment grade bonds increasing?
Yes, fifteen percent of outstanding non-investment grade bonds now cost eight percent or more, up from ten percent in 2021.
What is the main risk associated with the changing investor base?
The growing role of price-sensitive and leveraged investors may leave the debt markets more vulnerable to sudden financial shocks.
How has the debt-to-GDP ratio changed in OECD countries?
The ratio remained stable at eighty-three percent in 2025 but is projected to rise to eighty-five percent in 2026.
What did OECD Secretary-General Mathias Cormann say about AI?
He noted that AI-related financing needs are growing sharply and governments must address volatility risks while meeting these needs.
Safeguarding Stability in a High-Debt World
The OECD Global Debt Report 2026 serves as a vital reminder of the delicate balance between growth and sustainability. While debt markets remain resilient for now, the rising costs of servicing that debt pose a threat to future prosperity. Governments must pursue sound fiscal policies and strengthen their medium-term growth prospects to manage these record-breaking levels of borrowing.
At the same time, the private sector’s hunger for AI-related financing will continue to drive market activity and complexity. Navigating this landscape requires constant vigilance and a strategic approach to managing the shifting base of price-sensitive global investors. Ultimately, the stability of the global economy depends on how effectively we manage the twenty-nine trillion dollars in new borrowing.