Global debt markets are facing a transformation. During the past fifteen years, they have played a key role in supporting the recovery from this century’s two global crises – the 2008 financial crisis and COVID-19 pandemic – continuously providing capital to support companies and governments, helping prevent deeper recessions. But the world now needs to do more than just recover from crises. Wide-ranging macro-trends, demographic and climate-related, require an unprecedented level of investment, much of which will be debt-financed.
Our world has already shifted to a new paradigm in terms of debt levels, with governments and companies borrowing approximately USD 10 trillion more from markets every year compared to the pre-COVID period (2015-19) – greater than the combined GDP of Germany and Japan. Meanwhile, despite inflation falling back towards target and monetary policy generally loosening in 2024, interest payments continue to rise, as record levels of bonds issued at low rates need to be refinanced. Long-term rates also reached their highest levels in nearly 20 years in several major markets in 2024, as future macro-financial prospects have been reassessed. Many markets have also experienced greater volatility, reflecting increased uncertainty, an unprecedented level of debt supply and a more price-sensitive investor base.
While global markets have so far shown resilience to all of this, there are vulnerabilities in the system. The persistence of high long-term rates in core markets complicates the landscape for corporate and emerging market borrowers in particular, as investors can once more secure real returns in traditional safe assets.
The world in which debt markets operate is also changing rapidly. As governments and corporates seek to meet rising investment needs, in particular in the energy sector, they must navigate an environment shaped by slowing economic growth, heightened geopolitical risk and competing priorities for public and private funding. Difficult choices already have to be made. With each cent raised through debt markets costing more, these decisions become trickier still.
The second edition of the Global Debt Report comes at this critical juncture. Over four chapters, it analyses sovereign bond markets in OECD and emerging market and developing economies, corporate debt markets globally, and debt financing for the climate transition.
Policy makers around the world face an important and challenging task in ensuring the sustainability of debt trajectories while financing the investments needed to increase competitiveness and support long-term growth. This report leverages original data and analysis to support them in this endeavour.
Carmine Di Noia
Director for Financial and Enterprise Affairs, OECD