Global debt markets stay resilient despite record borrowing and rising risks

The OECD’s Global Debt Report 2026 finds that global debt markets remain stable despite record borrowing by governments and corporations, driven by refinancing needs and major investments such as artificial intelligence infrastructure. However, rising interest rates, growing reliance on short-term debt and a shift toward more price-sensitive investors could increase market vulnerability to future financial shocks.

The Global Debt Report 2026, prepared by the Organisation for Economic Co-operation and Development (OECD) through its Directorate for Financial and Enterprise Affairs and the Capital Markets and Financial Institutions Division, examines how sovereign and corporate debt markets are evolving in a period of high borrowing and economic uncertainty. The report finds that global debt markets have remained surprisingly resilient even as governments and companies increase borrowing to historic levels. Despite geopolitical tensions, trade disputes and policy uncertainty, bond markets have continued to function smoothly, with moderate volatility and strong investor demand.

However, the report warns that the stability seen in recent years may hide bigger structural risks. Debt levels remain elevated and are expected to grow further as governments finance spending and companies invest in new technologies. At the same time, central banks are gradually reducing their presence in bond markets, leaving private investors to absorb a larger share of new debt.

Record borrowing reshaping global finance

Borrowing by governments and corporations has reached unprecedented levels. Global debt markets are expected to supply around 29 trillion dollars in funding in 2026, highlighting the growing importance of bonds as a source of financing. Sovereign borrowing in OECD countries alone reached about 17 trillion dollars in 2025, a sharp increase compared with levels just a few years earlier.

Outstanding sovereign bond debt in advanced economies has also grown rapidly, reaching around 61 trillion dollars. Public debt remains high relative to economic output, with debt levels hovering above 80 percent of GDP in many advanced economies. Emerging markets have also seen record borrowing, pushing their sovereign bond debt stock to more than 12 trillion dollars.

Much of the borrowing is driven by refinancing needs rather than new spending. Governments must replace bonds issued during the era of low interest rates with new debt issued at higher rates. In 2025 alone, refinancing requirements among OECD countries reached roughly 13.5 trillion dollars, representing the majority of government borrowing.

Higher interest rates changing borrowing strategies

The sharp rise in global interest rates since 2022 has significantly changed the way governments and companies borrow. Long-term borrowing costs have increased across many advanced economies, pushing issuers to rethink their financing strategies. As a result, many governments have shifted toward issuing more short-term debt rather than long-term bonds.

Treasury bills and other short-term instruments have become increasingly important sources of funding. While these instruments help reduce immediate borrowing costs, they also create risks because governments must refinance them more frequently. If interest rates rise further or investor confidence weakens, countries with large amounts of short-term debt could face higher refinancing pressures.

Corporate borrowers are facing similar challenges. Companies that issued low-cost debt before interest rates increased are now gradually replacing it with more expensive borrowing. As older bonds mature, the cost of servicing corporate debt is expected to rise.

Investors in bond markets are changing

Another major transformation in debt markets is the changing structure of investors. For more than a decade after the global financial crisis, central banks played a major role in buying government bonds through large asset purchase programmes. These policies helped keep borrowing costs low and supported financial markets.

Today, many central banks are reducing their bond holdings as part of efforts to normalise monetary policy. This shift means that private investors must absorb a larger share of government debt. Investors such as hedge funds, investment funds and other financial institutions are becoming increasingly important in debt markets.

While this broader investor base brings more liquidity and diversity, it may also make markets more sensitive to changes in economic conditions. Private investors tend to react quickly to interest rate changes, inflation risks or geopolitical developments, which could lead to sharper price movements during periods of stress.

Artificial intelligence investment driving corporate borrowing

One of the most significant forces shaping future debt markets is the rapid expansion of artificial intelligence investment. Technology companies are investing heavily in data centres, computing infrastructure and advanced chips needed to support AI systems. These projects require enormous capital, and many firms are turning to bond markets to finance them.

A group of major technology companies raised more than 120 billion dollars in bond markets in 2025, accounting for a large share of technology sector borrowing. Their planned investments over the next decade could reach trillions of dollars, suggesting that technology firms will become increasingly influential players in global debt markets.

The growth of AI investment is also expected to influence other industries. Energy providers, construction companies and semiconductor manufacturers will all be involved in building the infrastructure needed to support large-scale computing systems. As these sectors expand, borrowing across corporate debt markets is likely to grow further.

Maintaining stability in a changing debt landscape

Despite rising borrowing levels, global debt markets have so far remained resilient. Governments and companies have been able to raise large amounts of capital without major disruptions. However, the report emphasises that maintaining this stability will require careful economic management.

Governments must balance the need for investment in infrastructure, technology and defence with the need to keep public finances sustainable. Strong fiscal policies, credible monetary frameworks and effective debt management strategies will be essential to maintain investor confidence. As debt markets continue to evolve, policymakers will face the challenge of ensuring that the global financial system remains stable while supporting long-term economic growth.