OECD: record global borrowing masks growing debt market fragility

Governments and corporations borrowed a record $27 trillion in 2025, keeping global debt markets afloat amid geopolitical tensions and sluggish growth, but the conditions sustaining that resilience are quietly shifting, according to a press release published by the Organisation for Economic Co-operation and Development (OECD). The OECD Global Debt Report 2026 finds the $109 trillion global bond market — now equivalent to 93% of world GDP — still functioning, but increasingly exposed to shocks as borrowing climbs and the investor base shifts. Total borrowing is projected to hit $29 trillion in 2026.

The numbers behind the headline are striking. Sovereign bond issuance in OECD countries is set to reach a record $18 trillion in 2026, up from $12 trillion in 2022, with outstanding government debt estimated at $61 trillion. In emerging markets, sovereign borrowing hit $4 trillion in 2025 — the highest debt stock relative to GDP since 2007.

OECD Secretary-General Mathias Cormann identified the core challenge plainly: “Debt-servicing costs are increasing, and AI-related financing needs are growing sharply.” His prescription — sound fiscal policies, stronger institutions, and growth-oriented reforms — reflects a broader concern that the safety nets governments relied on during past turbulence may not hold under the pressures building now. A key vulnerability is the shift away from central banks as dominant debt holders toward more price-sensitive investors like hedge funds and households, a transition the report warns could amplify market volatility significantly.

The AI dimension adds a new layer of complexity. In 2025, nine major technology “hyperscalers” raised $122 billion from bond markets alone — nearly half of all technology firm issuance globally. Their projected capital expenditure from 2026 to 2030 stands at $4.1 trillion, a figure roughly 35% larger than total capital spending by all US non-financial companies in 2025.

The overall picture the report paints is one of markets that have held together — but are being tested in new ways simultaneously. Rising borrowing costs, shorter debt maturities, and a more fragile investor base all point in the same direction: the window for governments to get their fiscal houses in order, before markets force the issue, is narrowing.