Global Debt Report 2026

Sustaining Debt Market Resilience Under Growing Pressure

Report

4 March 2026

1. Sovereign borrowing outlook

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Abstract

Sovereign bond issuance and the outstanding volume reached record highs in the OECD area in 2025, with refinancing requirements accounting for most of the gross borrowing. Elevated borrowing requirements, combined with decreasing demand for long-term bonds and heightened risk perceptions, have contributed to higher term premia and steeper yield curves. In response, many countries are rebalancing their issuance towards shorter maturities to limit exposure to higher long-term borrowing costs, although this increases refinancing risks. Meanwhile, rising interest payments, persistent budget deficits, and falling inflation are expected to push the OECD area debt-to-GDP ratio higher in 2026. Despite this challenging environment, sovereign bond markets have continued to function effectively, supported by improved liquidity, and have smoothly absorbed the record volumes of supply. However, the combination of record issuance, the growing role of leveraged market participants, and elevated policy uncertainty increases the vulnerability of markets to episodes of heightened volatility.

Key findings

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Gross borrowing in OECD countries reached a record USD 17 trillion in 2025, up from nearly USD 16 trillion in 2024, and is projected to rise to around USD 18 trillion in 2026. As a share of GDP, gross borrowing decreased by almost 1 percentage point (p.p.) to 23% but is projected to rise again to 24% in 2026.
Refinancing requirements hit a new high of around USD 13.5 trillion in 2025, accounting for near to 80% of gross borrowing. Net borrowing remained stable in 2025 but is projected to climb to nearly USD 4 trillion in 2026, the second highest level on record.
Outstanding sovereign bond debt in OECD countries reached an all-time high of USD 61 trillion in 2025, up from USD 55 trillion in 2024. This was the largest annual increase since the pandemic, partly driven by US dollar depreciation. Relative to GDP, sovereign bond debt remained stable at 83% between 2024 and 2025, but is projected to climb to 85% in 2026, the highest since 2021.
Sovereign bond debt in non-OECD EMDEs reached a record USD 12.1 trillion in 2025, equivalent to around 30% of GDP, the highest level since before 2007. While spreads tightened for most larger issuers, low-income countries in particular face a challenging financing environment.
Interest expenditures remain high, at 3.3% of GDP for the aggregate OECD area, close to the peak from the previous ten years of 3.4%. For the average OECD issuer, they remained close to 2%, just below the 2015 peak of 2.1%.
The impact of higher interest payments is set to outweigh that of falling inflation on the aggregate OECD debt-to-GDP ratio in 2026. Interest payments are projected to increase the ratio by 2.5 p.p. in 2026, while inflation is projected to decrease it by 2.4 p.p.
Long-term government bond yields continued to rise in 2025, while short- to medium‑term yields have stabilised. This yield curve steepening has been driven by factors including increased supply, lower structural demand for long-term bonds, and higher risk perceptions.
Increased term premia have prompted issuers to reduce the share of long-term bond issuance. In 2025, the ratio of fixed-rate bonds with maturities of at least 30 years compared to those with 1‑5 year maturities was the lowest since at least 2008. While this adjustment is viewed as cost-efficient ex-ante, it may exacerbate near to medium-term refinancing risks.
Treasury bills have become an increasingly important source of financing, surpassing fixed-rate bonds in terms of issuance volume, and now accounting for 15% of the debt stock.
Liquidity in bond and repo markets mostly improved, with higher trading volumes and the greater availability of collateral supporting the smooth absorption of record issuance.
Volatility continued to decline, with occasional bouts of turbulence often triggered by (geo-)political events and amplified by the increased presence of leveraged market participants.

This chapter presents developments in sovereign debt in OECD countries since 2007, including 2025 estimations and 2026 projections as of December 2025. Debt analysed here refers to central government marketable securities (Box 1.1). Topics covered include borrowing needs, debt trends, issuance strategies, market pricing, borrowing costs, and liquidity in sovereign bond and repo markets. It draws mainly on responses from Debt Management Offices (DMOs) to surveys on central governments’ marketable debt, and on primary and secondary government bond markets. The methodology can be found in Annex 1.A.

Borrowing requirements and outstanding debt trends

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Both the stock and flow of borrowing remain on an upward trajectory

The gross borrowing requirements of central governments in the OECD area continued the upward trajectory that began in 2023. This followed decreases in 2021 and 2022 after the large spike in issuance in 2020 at the onset of the COVID‑19 pandemic (Figure 1.1, Panel A). Borrowing increased by 7% in 2025, rising from around USD 16 trillion in 2024 to a record USD 17 trillion, and it is projected to reach around USD 18 trillion in 2026. As a share of GDP, gross borrowing decreased by almost 1 p.p. to 23% in 2025, but it is projected to rise again to 24% in 2026 (Figure 1.1, Panel B).

The aggregate OECD trend is driven by the largest issuers and is not always representative of developments in individual countries. Gross borrowing for the OECD median issuer was 9% of GDP in 2025, well below the 23% for the aggregate OECD area. This figure is projected to decrease to 8% in 2026, against an increase to 24% for the aggregate. Moreover, a few issuers, including Estonia, Greece and Ireland, reported that lower borrowing needs were a key challenge in 2025.

The stock of outstanding debt in the OECD area experienced its largest annual increase in 2025 since the COVID‑19 pandemic, with roughly one‑third of this increase due to US dollar depreciation against the euro and the British pound.1 Central governments’ bond debt increased from USD 55 trillion to USD 61 trillion. Keeping exchange rates constant, the 2025 figure would amount to USD 59 trillion, which would still be a record level (Figure 1.1, Panel C).

Figure 1.1. Gross borrowing requirements and outstanding debt levels
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Gross borrowing and outstanding debt reached record highs in nominal terms in 2025, but as a share of GDP, fell and remained stable, respectively

Despite the increase in nominal terms, sustained output growth resulted in the debt stock as a share of GDP in the OECD area remaining stable at 83% in 2025, but it is projected to increase to 85% in 2026 (Figure 1.1, Panel D). This increase would bring the ratio to within 4 p.p. of the 2020 peak. A similar trend is observable by looking at the OECD median issuer.

Annual refinancing requirements reached a record high in nominal terms in 2025, but declined as a share of GDP. They are projected to rise by both measures in 2026 (Figure 1.2, Panel A). Refinancing requirements increased by almost 1 trillion from around USD 12 trillion in 2024 to around USD 13.5 trillion in 2025 and are projected to increase further to USD 14 trillion in 2026. Thus, annual refinancing requirements are set to reach 19% of the OECD area GDP, close to the record reached in the immediate aftermath of the COVID‑19 pandemic in 2021.

A few large issuers account for the majority of refinancing requirements in the OECD area, with the United States and Japan representing close to 80% of the total (Figure 1.2, Panel B). However, while the share accounted for by Japan declined from 16% in 2020 to 7% in 2025, that of the United States increased from 57% to 70%.

Figure 1.2. Refinancing requirements
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Refinancing requirements reached record levels in 2025 and are projected to keep increasing in 2026

Refinancing requirements were stable as a share of GDP for the average OECD issuer from 2024 to 2025, at around 7%, but eight countries experienced increases of at least 1 p.p. (Figure 1.2, Panel C). Belgium, Iceland and Portugal experienced the largest increases. These countries are adopting different measures to face these higher refinancing requirements. Belgium has increased syndication volumes, Iceland has increased the number of outstanding bond lines, and Portugal has increased the number of lines outstanding as well as the number and size of auctions.2 The increase in operation sizes, in particular the use of syndications to raise large sums of cash in a single transaction, can support redemption management, with issuers often planning these supply events around redemption dates.

Annual net borrowing requirements in the OECD area remained broadly stable in 2025 but are projected to reach the second highest level ever in 2026 (Figure 1.3, Panel A). They remained at around USD 3.5 trillion in 2025 and are projected to reach close to USD 4 trillion in 2026, the highest on record after 2020, when they amounted to near USD 7 trillion. Net borrowing has consistently accounted for around 5% of GDP every year since 2023, 2 p.p. above the 2015-2019 pre‑pandemic average.

The level of OECD net borrowing requirement remained stable in 2025 despite changing trends across larger issuers (Figure 1.3, Panel B). In 2025, Japan’s share decreased from 5% to 4% amid an improving fiscal balance.3 The Euro area share increased by 3 p.p., largely driven by Germany and the Netherlands. The German fiscal stance is expected to be strongly expansionary in 2026. Dutch net borrowing requirements turned positive in 2025 amid an increased budget deficit-to-GDP ratio. The United States has accounted for around half to two‑thirds of total net borrowing requirements in the OECD area since 2007.

As a share of GDP, net borrowing remained stable between 2024 and 2025, but still substantially above pre‑pandemic levels. These aggregate figures pointing to stability in net borrowing requirements as a share of GDP mask sizeable differences across countries (Figure 1.3, Panel C). Net borrowing requirements as a share of GDP remained stable for both the OECD area as a whole (5%) and for the average OECD issuer (3%), but for only eight OECD countries.4 The largest increases in 2025 are estimated for Costa Rica, Hungary and Poland.5

Figure 1.3. Net borrowing requirements
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Net borrowing requirements as a percentage of GDP remained stable in 2025 but are projected to reach the second-highest level ever in 2026

Higher net borrowing requirements have resulted in some of the smallest issuers in the OECD making structural changes to their issuance strategies. For instance, Estonia introduced a Commercial Paper Programme in 2023 and a Domestic Bond Programme in 2024 to meet rising financing needs (Ministry of Finance of Estonia, 2024[2]). Moreover, Luxembourg has become a more regular issuer, having been largely inactive in terms of issuance in the preceding decades outside of economic crises.

Overall, gross and net borrowing did not significantly increase in 2025 as a share of GDP. However, they increased in nominal terms, remaining structurally higher than in the pre‑pandemic period. In some cases, these increases were unexpected, contributing to changes in annual funding plans, as Debt Management Offices (DMOs) strove to achieve the right balance between minimising risks and costs.

Box 1.1. Data coverage of the Sovereign Borrowing Outlook

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The Sovereign Borrowing Outlook analyses statistics on central government marketable debt, which is part of the more comprehensive measure of general government debt. This allows for clearer comparisons across countries and computation of relevant statistics for public debt management.

The central government is part of the general government sector, which consists of central, state, and local governments, as well as the social security funds they control. The central government covers all bodies classified under general government, which are agencies or instruments of the central authority of a country, except for separately organised social security funds or extra-budgetary funds.

Despite its narrower definition, central government debt accounts for 85% of the aggregate general government debt of the 24 OECD countries considered in this box. Looking at individual countries, central government debt is on average 85% of general government debt, accounting for at least 80% in 17 countries (Figure 1.4, Panel A). Among G7 countries, the exceptions are Canada (49%) and Germany (70%), reflecting the relatively high levels of federalism in these countries.

Figure 1.4. General government debt of selected OECD countries
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In terms of instruments, the Sovereign Borrowing Outlook focusses on marketable debt, defined as financial securities and instruments that trade in the secondary market, excluding instruments used for cash management. Other debts include currency and deposits; loans; insurance, pensions, and standardised guarantee schemes; and other accounts payable. Focusing on marketable debt allows for a more consistent analysis of public debt management topics such as portfolio composition, investor preferences, and market conditions, as well as computing measures such as duration.

Marketable debt securities account for 91% of the aggregate central government debt of the 24 OECD countries considered in this box. Looking at individual countries, debt securities are on average 76% of central government debt, accounting for more than 70% in 17 countries (Figure 1.4, Panel B). The only exception among G7 countries is the United Kingdom (62%), where insurance, pension and standardised guarantee schemes account for almost 30% of total central government debt.

Changed borrowing needs and shifts in demand required recalibrations of issuance

Fourteen central governments changed their issuance profile in 2025 compared to their original funding plans, mainly due to changed financing needs and shifting demand dynamics. On the financing side, nine issuers cited higher net borrowing, while four pointed to higher refinancing needs. On the demand side, most of the 14 issuers cited changed demand or changed demand expectations reported by primary dealers.

The most common change in issuance profile concerned the volume share of fixed-rate bonds with tenors between one and seven years (Figure 1.5, Panel A). For instance, Spain introduced a new seven‑year line in 2025, while Germany reintroduced its seven‑year line due to increased funding needs.6

Changes in the volume share of T-bills were the second most cited revision to issuance profiles. T-bills are commonly used to absorb unexpected shocks to funding needs, given the higher capacity of the market to absorb low-duration instruments. For instance, T-bill issuance increased in Belgium and the United Kingdom due to higher borrowing needs. In the United Kingdom, a planned increase in the T-bill stock accounted for virtually all the new net financing requirement that emerged from the in-year revision in April. Conversely, T-bill issuance was reduced in Denmark and Portugal in response to lower borrowing needs. Denmark decreased the number of monthly T-bill auctions.7

Many DMOs also changed the size and number of issuance operations, often due to a change in financing needs (Figure 1.5, Panel B). For example, the United Kingdom introduced programmatic gilt tenders at the start of its 2025-2026 financing year.8 Meanwhile, some issuers are making greater use of syndications as a strategic complement to auctions (Box 1.3). Since the pandemic, Finland introduced an additional syndication per year to launch bonds with a maturity of less than 10 years. Conversely, in 2025, Lithuania reduced the number of syndications in response to lower borrowing needs.

Uncertain borrowing requirements and shifts in demand highlight the importance of having flexible issuance strategies, while continuing to operate within a regular and predictable framework. Flexibility is already embedded as one of the core principles of DMOs’ borrowing strategies (OECD, 2024[4]). Six countries further increased the flexibility of their primary market operations in 2025. The most adopted measures were scheduling more ad hoc taps/operations and allowing more variation in auction sizes compared to initial plans (Figure 1.5, Panel C). Other examples include Belgium, which increased its flexibility regarding the announcement dates of syndicated transactions by announcing auctioned bond lines one day later; and Poland, which tapped more off-the‑run bonds.

Figure 1.5. Changes related to 2025 funding plans and flexibility in primary market operations
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Changes to the issuance of short-term bonds, and the size and frequency of operations, were the most common examples of issuers altering their plans in response to changed funding needs or demand conditions

Issuance by instruments and maturity

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Treasury bills have remained an important source of financing, and have accounted for a higher share of issuance volume in every year since 2023

The instrument composition of gross borrowing in the OECD area in 2025 marks a continuation of the post-pandemic trend characterised by a higher share of T-bill issuance. Following the COVID‑19 pandemic, the share of T-bill issuance began increasing and surpassed that of fixed-rate bonds in 2023. Since then, the two shares have both fluctuated at around 47% of total borrowing, with the share of T-bills remaining slightly higher than that of fixed-rate bonds (Figure 1.6). They are projected to stay at this level in 2026. A higher share of T-bill issuance increases short-term refinancing needs and related risks.

The share of inflation-linked bonds remained stable at 3% in 2025, despite the introduction of new inflation-linked bond lines and cases of increased re‑openings of existing ones. Eight countries introduced new inflation-linked instruments in 2025 or are planning to introduce them.9 Among them, Iceland issued inflation-linked bonds to settle liabilities of the country’s inflation-linked housing finance fund, which is currently being wound down (Icelandic Parliament, 2025[5]). Australia is planning to issue bonds linked to monthly inflation prints, in addition to those it currently issues, which are linked to quarterly prints. Meanwhile, the United States increased the auction sizes of inflation-linked bonds during the year.

Figure 1.6. Instrument composition of gross borrowing
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Treasury bills have accounted for a higher share of borrowing than fixed-rate instruments in the last few years

The increased reliance on T-bills is also evident when considering individual countries.10 Sixteen out of 26 regular OECD T-bill issuers had a higher share of T-bill issuances in 2025 compared to pre‑pandemic averages (Figure 1.7, Panel A). Moreover, the majority of these 16 countries issued a higher share of T-bills in 2025 compared to 2024. Austria, Iceland, and Sweden are the countries relying most heavily on T-bill issuance compared to pre‑pandemic practices, and their T-bill issuance share kept increasing in 2025. Austria and Iceland are also among the countries with the highest T-bills as a share of redemptions compared to the pre‑pandemic period (Figure 1.7, Panel B).

Only two regular T-bill issuers, Canada and Mexico, reduced their T-bills share of gross borrowing compared to both the pre‑pandemic average and in 2024. However, T-bills accounted for two‑thirds of redemptions in Canada and around one‑third in Mexico. The United Kingdom’s share of T-bill issuance is lower than pre‑pandemic level but increased in 2025 compared to 2024, while the UK DMO is exploring how to promote retail investments in T-bills, signalling a willingness to deepen this market in the near future (HM Treasury, 2026[6]).

Figure 1.7. Treasury bill issuance and refinancing requirements
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The importance of Treasury bills in issuance strategies since the COVID‑19 pandemic varies across countries

In many cases, the high level of T-bill issuance in 2025 was implemented in the context of a similarly high level of T-bill refinancing. In 36 out of 38 OECD countries, net issuance of T-bills remained negligible in 2025 when compared to the size of the economy, at no more than 1% of GDP (Figure 1.8). The only exceptions are Chile and the United States, which, in net terms, issued T-bills equivalent to slightly more than 1% of GDP. The United States transitioned six‑week bills from cash management bills to benchmark status in February 2025. This change followed positive feedback from market participants (US Treasury, 2024[7]; 2025[8]).11

Other evolutions in issuance strategies around T-bills are noteworthy. Poland issued T-bills in 2025 for the first time in four years. Among supranational issuers, the European Union’s issuance of T-bills reached a record high in 2025 (Box 1.2).

When looking at net borrowing for all instrument classes, fixed-rate debt still accounts for the highest share in OECD countries, equal to 3% of GDP on average (Figure 1.8). Denmark and Ireland were the only countries with negative net fixed-rate issuance in 2025. A few other countries, including Israel and Poland, also issued non-negligible volumes of variable‑rate and inflation-linked debt, in net terms, in 2025 (Figure 1.8).

Figure 1.8. Net borrowing by instrument as a share of GDP (2025e)
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Fixed-rate bond issuance still accounts for the vast majority of net borrowing in most OECD countries

Box 1.2. The European Commission as an issuer on behalf of the European Union

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The European Commission (EC)’s issuance of bonds and bills on behalf of the European Union (EU) increased fivefold from EUR 40 billion in 2020 to more than EUR 200 billion in 2025, taking the outstanding stock to EUR 700 billion (Figure 1.9, Panel A). T-bills were introduced in September 2021 and accounted for around 30% of gross issuance since 2022. Most borrowing funded the SURE and NGEU programmes, and support for third countries. While the SURE programme is completed, NGEU will be ongoing in 2026, and the EC will begin borrowing to fund SAFE, an instrument to boost defence capabilities. The stock of EU bonds and bills is expected to reach EUR 1 trillion by the end of 2026.

The evolution of borrowing costs and average term-to-maturity (ATM) at issuance since 2020 is in line with developments in Euro area sovereigns. The average yield to maturity at issuance increased from around 0% in 2020 to around 3% in 2025, while the ATM at issuance decreased from close to 15 years to 8 years (Figure 1.9, Panel B). The Commission stated that, in the first half of 2026, it will issue benchmark maturities between 3 and 30 years, focussing on 20 years or less. At the same time, the EC plans to rely more on T-bill issuance, given uncertainty in precise funding needs.

The characteristics of EU issuance reflect an effort to build a liquid curve, launching new lines via syndications and deepening their liquidity via re‑openings (Figure 1.9, Panel C). In 2020-2021, almost all issuances were made via syndications, and reopening volumes were low. In 2022-2023, the EC increased the volume of re‑openings and conducted proportionately more auctions. Since then, re‑openings represent almost two‑thirds of annual issuance. However, syndications still account for almost half and are used to open new and tap existing bond lines in roughly equal proportion.

Maintaining a regular and predictable issuance strategy, both in terms of issuance frequency and size, is important to support market confidence and investor demand. The EU as an issuer has become more regular and predictable with the funding strategy designed to finance NextGenerationEU in 2021, which has been further extended to all programmes in 2023. The relatively higher variation of issuance size is partly driven by evolving funding needs linked to various policy programmes (Figure 1.9, Panel D).

Figure 1.9. Characteristics of European Commission borrowing
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The maturity of issuance has shortened for most countries

A shift towards shorter maturities in the OECD area can also be observed when focussing on the maturity structure of fixed-rate bond issuance (Figure 1.10, Panel A). The volume of issuance with maturities higher than 15 years has declined in 2024 and 2025 relative to those with maturities lower than five years. For instance, the ratio of bonds with maturities of at least 30 years to that of 1‑5 year bonds fell to 6% in 2025, the lowest level since at least 2008.

The proportionally higher issuance of bonds with shorter maturities over the last few years may appear consistent with the rise in term premium since 2022, which is discussed later in this chapter. However, it is important to account for the differences in issuance strategies of individual OECD issuers. Panel B of Figure 1.10 groups countries by the evolution of the ATM of issuance before the COVID‑19 pandemic (2015-2019), during (2020-2022), and after (2023-2025).

A relative majority of OECD issuers increased their ATM of issuance during the pandemic and decreased it afterwards. These countries included the largest issuers, such as Japan and the United States, which drove the aggregate OECD trend. Japan, for instance, modified its long-term funding strategy in 2025 by decreasing the issuance share of 20, 30 and 40 year bonds. Countries following a similar trend include Belgium, which conducted fewer syndicated transactions and auctions for longer tenors in 2025, due to less explicit demand for them. Moreover, in Spain, the steepening of the yield curve was a reason for a lower share of longer-dated issuance in 2025.

Four smaller issuers adopted the opposite approach: Australia, Costa Rica, Czechia and Poland. The ATM of issuance by these countries decreased during the pandemic and increased afterwards. Costa Rica was one of only two countries, along with Iceland, that reported a material increase in the ATM of issuance in 2025 compared to 2024.

In other countries, the ATM of issuance kept evolving according to the same trend during and after the pandemic (Figure 1.10, Panel B). The ATM of issuance kept increasing in seven countries. Among them, Iceland kept increasing the ATM of issuance in 2025 due to the increased issuance of inflation-linked bonds, which are generally issued at longer maturities on average, than fixed-rate bonds.

The ATM at issuance of the remaining eight countries kept decreasing across these periods. Among them, the United Kingdom has experienced one of the sharpest decreases in the ATM of issuance, although it still has the longest ATM in the G7. This continued in 2025 as the UK DMO kept adapting to lower demand for long and ultra-long maturities, which had previously been a much larger feature of the UK sovereign bond market compared to other G7 issuers.

Figure 1.10. Maturity of fixed-rate issuances
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In 2025, long-term bonds accounted for the smallest share of fixed-rate issuance in the OECD area in more than a decade

Box 1.3. Syndications as a strategic complement to auctions

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In recent decades, syndications have become an increasingly important complement to auctions in sovereign debt management. In a syndication, a small group of banks (the syndicate) directly places a bond with its investor client base. As a result, the bonds are not warehoused by primary dealers and therefore do not require primary dealer balance sheet capacity as is the case at auctions. While the regular and highly standardised auctions are generally regarded as cost‑efficient, syndications offer several advantages as a strategic complement (AOFM, 2019[9]). They are, however, costly due to the fees paid to the syndicate and require greater operational administration by the issuer.

According to the OECD Survey on Central Government Marketable Debt and Borrowing, 87% of issuers make use of syndications, typically conducting a low single‑digit number of transactions per year. As shown in Figure 1.11 for a sample of issuers, most syndications are used to introduce new securities. Due to the direct placement with investors, a stronger marketing effect, and greater timing flexibility, syndications allow issuers to place larger volumes than in auctions, immediately enhancing liquidity and investor diversification in the new bond. They also support price discovery through direct engagement with investors, making them particularly well-suited for yield curve extensions and the issuance of non-standard instruments.

For several issuers, the volume of syndications spiked at the onset of the COVID‑19 pandemic, underscoring their importance as a flexible tool for scaling up issuance in periods of sharply elevated funding needs (Figure 1.11). While conventional bonds account for the largest share of syndicated issuance in absolute terms, issuers rely more heavily on syndications for non-standard instruments when measured relative to their respective total issuance volumes.

Figure 1.11. The use of syndications by selected OECD sovereign issuers
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Notably, the two largest OECD issuers, Japan and the United States, do not conduct syndications, and Germany, the benchmark issuer of the Euro area, only began using them on a regular basis in 2020. This suggests that the larger an issuer’s investor base is, and the more standardised and liquid its debt instruments are, the less advantage there is to complement auctions with syndications. Germany’s decision to introduce regular syndications in 2020 was driven, first, by the historically sharp increase in borrowing requirements during the COVID‑19 pandemic following a long period of low issuance, and second, by the launch of green bonds as a new product segment.

In addition to being an alternative issuance method, syndications can play an important role in the relationship between issuers and their primary dealers. For primary dealers, receiving a syndication mandate is highly attractive, both because of the fees earned and also because it improves their rankings in so-called league tables, thereby attracting future business. Issuers typically select banks for running syndications based on their performance in auctions and secondary market trading.

The prospect of being mandated for a syndication, therefore, incentivises primary dealers to participate actively in both auctions and secondary markets, effectively making syndications a reward mechanism. Empirical evidence shows that announcements of upcoming syndications lead to higher bidding volumes and higher bidding prices at bond auctions (Shida, 2023[10]). The possibility of achieving higher prices at auctions can, in turn, at least partially offset the syndication fees paid by the issuer. Due to this and the services provided by the syndicate, the fees may be considered a worthwhile investment (World Bank, 2015[11]).

There are, however, several potential disadvantages associated with conducting syndications. First, due to their non-standardised nature, they require substantial and time‑consuming operational efforts on the side of the issuer. Second, because syndications offer limited transparency – especially regarding the selection of mandated primary dealers and the price‑setting process – they may entail reputational risks for the issuer. Third, their incentivising effect may lead particularly strong primary dealers to dominate auctions through aggressive bidding. This, in turn, may result in a narrower bidder base if other primary dealers become discouraged from participating. These factors explain why sovereign issuers treat syndications as a complement to auctions and generally limit their use to a few transactions per year.

Source: AOFM (2019[9]), Bond issuance methods – tenders versus syndications, Australian Office of Financial Management, https://www.aofm.gov.au/investors/wholesale‑investors/investor-insights/bond-issuance‑methods-tenders-versus-syndications; Shida, J. (2023[10]), “Primary Market Demand for German Government Bonds”, Journal of International Money and Finance, Vol 137, https://doi.org/10.1016/j.jimonfin.2023.102909; World Bank (2015[11]), “Domestic Syndications: Background Note”, https://doi.org/10.1596/24087.

Outstanding debt trends

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The composition of the outstanding debt reflects the shift towards higher Treasury bill issuance since the pandemic

The instrument composition of the record-high OECD debt stock in 2025 remained roughly the same as in 2024 and 2023 (Figure 1.12, Panel A and B).12 During the last three years, fixed-rate bonds accounted for around 76% of the outstanding stock, followed by T-bills (around 15%), inflation-linked debt (around 8%) and variable‑rate debt (around 2%).13 Fixed-rate debt remains the largest type of debt outstanding also when looking at individual countries. On average, fixed-rate debt accounted for 84% of OECD countries’ debt outstanding in 2025.

Only a few countries have a relatively low share of fixed-rate debt in 2025 (Figure 1.12, Panel C). The fixed-rate share of outstanding debt is lower than 70% in only seven countries. Among them, T-bills account for 22% of the debt of the United States and 15% in Sweden. Moreover, variable‑rate accounts for one‑fifth of outstanding debt in Türkiye and one‑tenth in Mexico. Lastly, inflation-linked bonds account for 43% of Iceland’s debt and around 30% in Chile, Israel and Mexico.14

The fact that the instrument composition of the debt stock in 2025 is roughly the same as the last two years represents the consolidation of a shift that happened during the COVID‑19 pandemic, when the share of T-bills increased while that of other debt instruments decreased. More precisely, the 15% share of T-bills in 2025 is almost 5 p.p. higher than the 2015-2019 average (Figure 1.13, Panel A). At the same time, the share of fixed-rate, 76%, is around 4 p.p. lower.

Issuing T-bills provides debt managers with operational flexibility, enabling rapid funding in response to uncertainty and temporary shocks. In periods of heightened uncertainty or elevated borrowing needs, investor demand tends to shift toward safer, more liquid assets. On the supply side, these instruments allow governments to better match uncertain and often uneven revenues and expenditures and to repay more quickly if conditions improve (OECD, 2024[4]).

T-bills have acted as shock absorbers during the global financial crisis and the onset of the COVID‑19 pandemic in 2020 (Figure 1.13, Panel B). However, in the case of the financial crisis, the share of T-bills returned to pre‑crisis level two years after the shock, in 2010. In the case of the COVID‑19 pandemic, the share of T-bills initially decreased but started increasing again in 2023 and is now at a level well above the pre‑pandemic average.

Figure 1.12. Instrument composition of outstanding debt
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The instrument composition of outstanding debt in the OECD area remained largely stable in 2025, consolidating the post-pandemic shift characterised by a higher T-bill share

Figure 1.13. Treasury bill share of OECD debt stock
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The Treasury bill share of the OECD debt stock increased following the COVID‑19 pandemic but did not decrease thereafter, unlike in the post 2008 period

The average ATM of debt stocks in the OECD was 8 years in 2025, but single countries’ ATMs ranged from 4.25 years (Türkiye) to 13.7 years (Korea) (Figure 1.14). The higher relative share of T-bills contributed to the ATM of debt stocks decreasing or remaining stable in most OECD countries from 2024 to 2025. Amongst G7 issuers, the ATM decreased in Germany, Italy, Japan, and the United Kingdom, while it was unchanged in France and the United States, and increased in Germany.

In seven countries, the ATM reached the lowest level in a decade. The United Kingdom is amongst these but still has the second-highest ATM among all OECD countries, at 13.5 years. In other countries, the ATM is just above the decade low, these include Italy and the United States.

Figure 1.14. Average term to maturity of the outstanding debt stock
Copy link to Figure 1.14. Average term to maturity of the outstanding debt stock

For a majority of issuers, the ATM was lower in 2025 compared to 2024, and in some cases fell to the lowest level in a decade

The debt-to-GDP ratio increased in most countries in 2025

Debt-to-GDP ratios increased in 27 OECD countries in 2025 compared to 2024, in some cases nearing or surpassing the level reached during the COVID‑19 pandemic in 2020.15 Among G7 issuers, the ratios in Canada, the United States and the United Kingdom were the same as in 2020. In France and Germany, the ratios were 5 p.p. and 2 p.p. higher, respectively. Italy has the second-highest debt-to-GDP ratio in the OECD area, but in 2025 the figure was 11 p.p. below the pandemic peak.

Nominal GDP grew faster than the debt stock in the remaining 11 OECD countries in 2025, pushing the debt-to-GDP ratio down compared to 2024. Japan was the only G7 country amongst these, and the increase there was largely due to inflation. Japan was the country where inflation pushed the debt-to-GDP ratio down the most across all OECD countries in 2025.16 Japan also experienced a pickup in real GDP growth from ‑0.2% in 2024 to 1.1% in 2025.17 Denmark, Ireland, Portugal, Slovenia and Türkiye have seen the largest falls in debt-to-GDP since 2020.

Figure 1.15. Debt-to-GDP ratio by country
Copy link to Figure 1.15. Debt-to-GDP ratio by country

By the end of 2025 the debt-to-GDP ratio in many OECD countries was close to the highest level in the past decade

Interests payments and inflation have been the main drivers of the evolution of the OECD area debt-to-GDP ratio during the last few years, on the back of roughly stable contributions from real GDP growth (Figure 1.16, Panel A). The downward pressure of inflation on the OECD area debt-to-GDP ratio has outweighed the upward pressure of higher interest payments since 2021. However, these two factors have been diverging, with inflation decreasing and interest payments increasing. In 2026, interest payments are projected to outweigh inflation in terms of the impact on debt-to-GDP, contributing to an increase from around 83% in 2025 to 85%.

The downward pressure from inflation on debt-to-GDP ratios across OECD countries is dissipating. Inflation pushed debt ratios down by only 1.5 p.p. in the average OECD country in 2024-2025, compared to 3 p.p. in 2022-2023 (Figure 1.16, Panel B). During 2022-2023, inflation decreased debt ratios by more than 5 p.p. for larger issuers such as Japan, Italy, the United States and the United Kingdom.

The effect of higher interest payments on debt-to-GDP ratios has grown over the last few years, pushing debt ratios up by 2 p.p. in the average OECD country in 2025, from 1.6 in 2019 (Figure 1.16, Panel C). Interest payments were a particularly important driver of the rise in debt to GDP ratios in Hungary and the United States in 2025, pushing their debt ratios up by around 4.5 p.p. (Figure 1.16, Panel D). Only Ireland and Japan experienced enough real economic growth to outweigh the effect of higher interest payments.

Figure 1.16. Decomposition of the debt-to-GDP growth rate
Copy link to Figure 1.16. Decomposition of the debt-to-GDP growth rate

The effect of inflation on lowering the debt-to-GDP ratio in the OECD area is fading, while rising interest payments are having a greater effect in pushing it up

Interest expenditures as a share of GDP remained at high levels in 2025 compared to the last decade (Figure 1.17). The aggregate OECD interest-to-GDP ratio in 2025 is 3.3%, also close to the 3.4% peak from the previous ten years. For the average OECD issuer, it remained close to 2%, just below the 2015 peak of 2.1%. Interest payments to GDP increased in 22 out of the 32 OECD countries for which data are available in 2025. As issuance yields follow market pricing, the trajectory for interest payments relates closely to secondary market developments, which are analysed in the next section.

Figure 1.17. Interest expenditures as a share of GDP
Copy link to Figure 1.17. Interest expenditures as a share of GDP

Interest expenditure as a share of GDP was close to the highest level of the last decade in the OECD area and in many individual countries in 2025

Box 1.4. Sovereign debt trends in emerging market and developing economies (EMDEs)

Copy link to Box 1.4. Sovereign debt trends in emerging market and developing economies (EMDEs)

Gross borrowing by central governments in EMDEs, including OECD EMDEs, crossed USD 4 trillion in 2025, a significant increase from around USD 3 trillion in 2024. Borrowing has become more concentrated as measured by the Herfindahl-Hirschman Index (HHI), increasing from 0.1 in 2019 to 0.2 in 2025 (Figure 1.18, Panel A). This trend was predominantly driven by the top five borrowers, who represented 78% of the total in 2025: the People’s Republic of China (hereafter ‘China’), India, Brazil, Egypt and Argentina.

As a result of this sustained borrowing activity, the outstanding central government marketable debt of EMDEs continued to increase in 2025, both in nominal terms and relative to GDP (Figure 1.18, Panel B). The total stock increased by close to USD 2 trillion compared to 2024, to around USD 14 trillion. This stock corresponds to 30% of GDP, the highest share since at least 2007.

Outstanding EMDE marketable debt is characterised by a lower share of foreign currency debt in 2025 compared to 2019 (Figure 1.18, Panel C). Moving away from foreign currency debt reduces vulnerability to exchange rate risk and can support the development of the local currency bond market. However, this is sometimes forced, as some countries can lose access to international capital markets, or can only access them at prohibitively high costs. This shift accelerated as rising global interest rates and prohibitive sovereign spreads made international borrowing costlier and limited market access for some issuers. This is particularly prevalent for low-income countries, where the share of foreign currency-denominated debt decreased from 18.7% in 2019 to 7.6% in 2025.

In terms of maturity profiles, around 36% of the outstanding EMDE bond stock matures within three years (Figure 1.18, Panel D). This can be a critical indicator of refinancing risk, as it determines the volume of debt that must be rolled over in the near term. Low-income countries face an exceptionally heavy schedule with 52% of their outstanding bonds maturing by 2028, and 29% just by the end of 2026. To address these pressures, some low-income issuers are taking measures. For example, Uganda issued a record-size 25‑year domestic bond in August 2025 to extend its maturity profile.

Figure 1.18. Trends in the issuance and stock of sovereign bonds in EMDEs
Copy link to Figure 1.18. Trends in the issuance and stock of sovereign bonds in EMDEs

Despite the rising debt stock, market sentiment has improved concerning certain, mostly larger, EMDEs in 2025, reflected in tightened USD-denominated EMDE bond spreads (Figure 1.19, Panel A). Spreads tightened the most in Türkiye (‑57 bps), Brazil (‑53 bps) and Mexico (‑44 bps). This trend was largely driven by interest rate cuts in many key jurisdictions and, in some cases, plans for fiscal consolidation, such as in Brazil and Mexico.

There was a steep divergence in financing conditions for low-income groups compared to other EMDEs in 2025 (Figure 1.19, Panel B). This is reflected in the share of bonds issued where total interest payments will exceed the principal amount. For low-income issuers this share jumped from 6% in 2019 to almost 20% in 2024 and 2025. Some countries in the other income groups were able to adjust their issuance strategies to avoid locking in higher rates. For example, Colombia decreased the average maturity of its newly issued bonds from around 14 years in 2024 to nearly 7 in 2025. This was done in response to higher long-term rates (Scotiabank, 2025[12]).

Despite elevated debt levels, the overall credit outlook improved in 2025, with EMDEs receiving 44 upgrades versus 16 downgrades (Figure 1.19, Panel C). Most rating changes occurred within the non-investment grade category, rather than between investment and non-investment grade categories. Egypt was a notable case, receiving its first upgrade since 2018. Only one low-income country received an upgrade, Zambia, exiting default through debt restructuring; and one downgrade, Mozambique, due to increased liquidity pressures following post-election unrest (Fitch Ratings, 2025[13]). Other factors that contributed to this overall improved trend were rebuilt foreign exchange reserves and greater fiscal transparency.

The composition of EMDE sovereign bond debt by the credit rating of the issuer predominantly reflects the greater volume of borrowing by larger, higher-rated economies. Bonds issued by investment grade countries dominated the stock in 2025, accounting for nearly 79% of the total outstanding (Figure 1.19, Panel D). Bonds issued by very high risk or in default countries represented just 1% of the total.

Figure 1.19. . Borrowing costs and credit risk for EMDEs sovereigns
Copy link to Figure 1.19. . Borrowing costs and credit risk for EMDEs sovereigns

Secondary market developments and their impact on borrowing costs

Copy link to Secondary market developments and their impact on borrowing costs

Issuing record volumes at higher costs

Sovereign issuers have adjusted their issuance strategies to face the challenging environment of record‑high funding needs and interest rates that are persistently elevated compared to the pre‑pandemic period. This situation may represent the new normal for the foreseeable future, given that neither a significant fiscal consolidation nor a return to the low‑interest‑rate environment of the 2010s seems likely (OECD, 2025[1]).

The gross borrowing needs of OECD sovereign issuers stand at record high levels and are expected to remain so in the coming two years. As shown in Panel A of Figure 1.20, the GDP-weighted average of G7 countries’ two‑year-ahead budget deficits surged sharply during the COVID‑19 pandemic outbreak. Although it improved over the subsequent two years, it has since begun to rise again and now stands at a level previously reached only in 2020. The same pattern emerges when looking at the minimum and maximum deficits across countries, which stand at levels similar to those in 2020. For sovereign debt markets, this implies that there is currently little reason to expect a decline in issuance volumes in the years ahead.

In contrast to historical patterns, the expectations of sizeable fiscal deficits in the next two years are not accompanied by an accommodative monetary policy stance. Despite the recent easing of monetary policy by major central banks, two‑year‑ahead policy rate expectations have stabilised at elevated levels across all major markets (Figure 1.20, Panel B). In addition, central banks’ quantitative tightening (QT) has increased the amount of bonds to be absorbed by markets, putting upward pressure on longer-term bond yields (see also Chapter 3). While some central banks – for example, in the United Kingdom and the United States – are expected to ease policy further through rate cuts in the near future, others, such as in Australia, Canada and Japan, are expected to tighten monetary policy in 2026. In contrast, the ECB is projected to maintain its policy rate at its current level, as expected inflation has stabilised close to the 2% target rate.

Figure 1.20. Medium-term expectations of fiscal balances and central bank rates
Copy link to Figure 1.20. Medium-term expectations of fiscal balances and central bank rates

In contrast to historical patterns, high deficits are currently not accompanied by accommodative interest rates

Similar to central bank rates, issuance yields of government debt securities stand at elevated levels when compared to the pre‑pandemic period. The volume‑weighted aggregate OECD issuance yield of fixed rate bonds and T-bills stood at around 4% in 2025, decreasing slightly from 2023 and 2024, but still corresponding to a level last reached in 2007 (Figure 1.21, Panel A). At the individual country level, volume‑weighted issuance yields are also close to their highest values since 2015 in almost all OECD countries (Figure 1.21, Panel C). Outside the OECD area, the cost of borrowing has also remained elevated, with the greatest impact occurring in low-income countries (Box 1.4).

While issuance yields remain high, bond issuance relative to GDP stands at an elevated level (Figure 1.21, Panel B). Historically, episodes of higher borrowing needs have tended to occur in periods characterised by accommodative monetary policy and low yields. Since 2023, both issuance volumes and issuance yields are at unusually high levels, even as issuers have been skewing their issuance to shorter segments to limit the effect of high long-term yields on interest expenditure. This combination of high market yields and record borrowing needs places sovereign issuers in a challenging position.

Figure 1.21. Issuance yields
Copy link to Figure 1.21. Issuance yields

High issuance volumes at high costs put issuers in a challenging position

A culmination of key drivers has caused a pronounced steepening of yield curves

With major central bank rates stabilising overall, a pronounced long-end steepening of yield curves in the OECD area has become a defining feature of today’s bond market landscape (Figure 1.22, Panel A, B, and C). In 2025, 2‑year yields in the OECD area have been broadly stable, with the median currently standing at around 2.5%, down from nearly 4% in 2023. Similarly, the 10‑year yield median moved mostly sideways in a range between 3 to 3.5% in 2024 and 2025. In contrast, in 2025, 30‑year yields increased in 21 of 23 OECD countries with available data, with the median yield rising from 3.2% to 4.1% over the course of 2025.

Figure 1.22. Bond yields and term spreads
Copy link to Figure 1.22. Bond yields and term spreads

Yield curves have steepened markedly, especially at the long end

Yield curve steepness, measured by the 2‑10 years spread, was positive at end-2025 for all countries except Iceland18 (Figure 1.22, Panel D). It stood above the 2023-2025 average for all countries, reaching levels near the maximum observed in recent years. In many cases, steepness has been increasing due to both lower short-term yields and higher long-term yields. Additionally, compared with 2020-2023, the yield curves of major markets shifted markedly upwards (Annex 1.D).

The strong increase in long-end yields observed in 2024 and 2025 has been driven by a combination of various key factors working in the same direction. As markets tend to immediately react to new information, the respective mechanisms are forward-looking, i.e. market prices do not only incorporate current developments but, importantly, also expectations of future developments.

In terms of interest rate expectations, an improved economic outlook over the course of 2025 stabilised expectations of elevated future central bank rates in many countries, which in turn has exerted upward pressure on long-term yields.

Box 1.5. The role of government bond auctions in supply absorption and price discovery

Copy link to Box 1.5. The role of government bond auctions in supply absorption and price discovery

A recent side‑effect of the high fiscal deficits and occasionally sharply increasing yields has been greater public focus on developments in sovereign bond markets – including debt issuance. Following a number of bond auctions in different countries with relatively low bid-to-cover ratios, some observers argued that lower bidding volumes might indicate the limits of markets’ willingness to absorb additional debt (Financial Times, 2025[14]).

The volume of bids at bond auctions is, however, not a sufficient indicator for overall market demand. While the volume that can be sold at a single primary market transaction is indeed limited, especially due to the short-term absorption capacity of financial intermediaries, it is unlikely that aggregate demand would be limited, as the price discovery mechanism ensures that liquid government bonds will attract buyers, albeit potentially at lower prices. As argued above in this chapter and in Chapter 3, this mechanism is currently visibly at work, with elevated levels of free float pushing up yields.

Figure 1.23 depicts bid-to-cover ratios, i.e. the volume of total bids relative to the allotted volume of 10‑year bond auctions in G7 countries. Comparing these with the issuance volumes presented in the previous sections indicates that there is no correlation between the amount of debt to be absorbed and bid-to-cover ratios at auctions. Despite high issuance volumes, the monthly cross-country average of bid-to-cover ratios has been remarkably stable. Similarly, in the OECD Survey on Central Government Marketable Debt and Borrowing, 28 DMOs reported stable auction demand over the last year, four reported elevated demand, and only two reduced demand.

Figure 1.23. Bid-offer ratios at 10‑year government bond auctions for G7 countries
Copy link to Figure 1.23. Bid-offer ratios at 10‑year government bond auctions for G7 countries

Regarding bond supply, record issuance levels and declining central bank holdings have significantly raised the volume of bonds that need to be absorbed by markets, thereby pushing up yields (see Chapter 3). A clear example of increased supply expectations was the announcement of the German defence and infrastructure package in March 2025, which led the German 10‑year government bond yield to surge by more than 50 basis points over the month (Bloomberg, 2025[15]).

On the demand side, several forces have contributed to upward pressure on long-term bond yields. Most prominently, the structural shift from DB to DC pension schemes has reduced pension funds’ appetite for long-duration assets in certain jurisdictions (see Chapter 3). In addition, structural demand for long-term bonds has weakened due to cross-term substitution (Jansen, Li and Schmid, 2024[16]): with yields elevated across the curve, investors have partially rebalanced away from the long end toward medium maturities, increasing yield curve steepness.

Lastly, an increased investor risk perception over the course of 2025 led to lower demand in long-term bonds. Among the factors mentioned by market participants were a heightened focus on fiscal trajectories and debt-sustainability, a questioning of central bank independence and related inflation risks, and increased (geo-)political risks.

While these factors contributed to a repricing of long-term bonds, demand at government bond auctions remained reliable, with markets absorbing high issuance volumes smoothly overall (Box 1.5).

Interest rate expectations do not fully explain the rise in long-term bond yields

As argued above, a range of factors has contributed to the increase in long-term interest rates observed in recent years. Some of these factors are directly linked to expectations of higher future short-term interest rates, which are set by central banks. Other factors – particularly those related to exogenous demand and supply dynamics – in general do not influence expectations of short-term rates, at least not directly. If, for example, pension funds rebalance their portfolios due to regulatory changes, this will to some degree affect bond yields while effects on short-term rate expectations should be negligible. These factors currently exert a significant influence on the market pricing of government bond yields, pushing them well above the levels justified by interest rate expectations.

In simple theory, long-term bond yields should approximately equal the average of expected short-term interest rates over the lifetime of the respective bond. In practice, however, bond yields can deviate substantially from interest rate expectations. This difference between a bond yield and the average expected short-term rate is known as the term premium, which captures both risks regarding future real interest rates and inflation. Additionally, the term premium might take into account default risks. It represents the component of a bond yield that compensates investors for holding long-term securities instead of rolling over a series of short-term instruments (Cohen, Hördahl and Xia, 2018[17]).

The term premium reflects the compensation investors require for bearing additional risk stemming from longer maturities. From a pure risk perspective, investors would typically prefer short-term instruments, as these have a lower price volatility and can be sold at any time without incurring significant capital losses.19 Long-term bonds, by contrast, can be subject to significant volatility, and investors who sell before maturity may face considerable capital losses.

Because investors’ expectations of future short-term interest rates are generally not directly observable, the term premium cannot be calculated mechanically. It can, however, be approximated by comparing bond yields with information taken from other financial instruments or estimated using econometric techniques. A simple indicator related to the term premium is the swap spread, defined as the difference between the fixed rate of an interest rate swap and the yield of a government bond with a similar maturity. A lower swap spread implies that the bond is relatively cheap compared with the swap contract (OECD, 2025[18]).

Ten-year swap spreads were mostly positive from 2015 until 2023, indicating that government bonds benefited from the additional value associated with their use as collateral in financial transactions. Against the backdrop of rising net supply, long-term bonds subsequently cheapened markedly relative to swaps, with the median spread reaching historical lows of nearly 0.5% at the beginning of 2025. Over the course of 2025, both 10‑ and 30‑year swap spreads recovered to some extent but still remained at exceptionally cheap levels when compared with the last decade (Figure 1.24, Panel A and B).

Similarly, 10‑year term premium estimates in major OECD countries have risen sharply since 2023 (Figure 1.24, Panel C). Between 2019 and 2022, estimated term premia were mostly negative, likely driven by strong demand for duration in an environment of very low yields and by the reduction in bond supply due to quantitative easing. Term premia rose markedly in 2022 and continued to climb afterwards as inflation increased across countries and central banks tightened monetary policy. At the end of 2025, the average term premium, at 0.84%, reached its highest level in more than ten years. Taken together, falling swap spreads and rising term premia suggest that the increased supply of government bonds has led to rising yields, especially at longer maturities.

Figure 1.24. Long-term bond valuation measures for OECD countries
Copy link to Figure 1.24. Long-term bond valuation measures for OECD countries

Rising term premia have contributed significantly to the long-end-cheapening

Term premia play an important role in the portfolio strategy of sovereign issuers. When term premia are low, it is, all else being equal, rational for issuers to increase the share of long‑term bond issuance, rather than focussing on short‑term instruments that entail higher refinancing risk. Conversely, when estimated term premia are high, as is the case today, it is appropriate to shorten portfolio duration to reduce interest expenditures. As shown in the previous sections, this has indeed been the case recently, with issuers significantly scaling back the issuance share of long‑term bonds.

According to the 2025 OECD Survey on Central Government Marketable Debt and Borrowing, 26 of 34 responding DMOs regard term premium estimation as valuable or highly valuable. However, term premia are not the only factor driving the decision of where to issue along the curve, with supporting liquidity across the curve and maintaining a stable and predictable issuance strategy also being important objectives for DMOs (OECD, 2025[18]).

From an economic perspective, it makes basically no difference whether issuers directly rely on term premium estimates or whether they base their decisions on the reported demand for specific maturities as stated by market participants. This is because term premia are predominantly driven by the supply and demand conditions for long‑term bonds. Conversely, the current adjustment in long-term bond supply helps to some extent to dampen further increases in term premia. This may ease some of the pressure on the market, but the other factors currently weighing on bond valuation remain in place.

Elevated real yields cast doubt on the sustainability of current fiscal paths

The yields of inflation-linked bonds, so-called real yields, in OECD countries remain at elevated levels after having sharply increased in the context of monetary policy tightening around 2023 (Figure 1.25, Panel A). The median 10‑year real yield stood at about 1.5% at the end of 2025 after fluctuating around 0% between 2015 and 2021. At the single‑country level, real yields stand markedly above their averages since 2015 for most countries (Figure 1.25, Panel B). With given growth rates of economic activity, higher real yields limit fiscal space and increase the burden of public debt, worsening debt sustainability (OECD, 2024[4]).

Figure 1.25. Real yields and breakeven inflation
Copy link to Figure 1.25. Real yields and breakeven inflation

Both real yields and breakeven inflation are highly elevated compared to the pre‑pandemic period

The rise in real yields has been driven by a surge in nominal bond yields that has not been matched by a similar increase in breakeven inflation, i.e. the difference between nominal and real yields (Figure 1.25, Panels C and D). At the end of 2025, average breakeven inflation across countries stood at 2.3% for the ten‑year horizon, which is above the 2% inflation target aimed at by many inflation-targeting central banks. Breakeven inflation rates do not necessarily only reflect inflation expectations but may also include inflation risk premia (D’Amico, Kim and Wei, 2018[22]). The elevated level of real yields can be interpreted as indicating a structural break from the pre‑pandemic era. Higher real yields can be explained by factors including more expansive fiscal policy and a structurally tighter monetary policy stance.

The stock of outstanding debt increasingly reflects higher issuance yields

Higher market yields are slowly translating into an outstanding debt stock characterised by higher servicing costs. One-fifth of the fixed-rate bonds outstanding in 2025 have been issued at a yield of more than 4%. This is the highest share since 2015 and a 7 p.p. increase compared to 2024 (Figure 1.26., Panel A and B). This mirrored the decrease in the share of fixed-rate bonds with yields at issuance of lower than 2% (Figure 1.26., Panel B).

This trend is set to continue in the foreseeable future if issuers refinance or issue new bonds at current market yields. One‑third of the OECD fixed-rate debt outstanding at the end of 2025 is set to mature between 2026 and 2028 (Figure 1.26, Panel C). At the same time, 10‑year market yields have been around 2 p.p. higher than those of maturing bonds every year since 2023. This is in sharp contrast with previous years that were characterised by a gap that was no higher than 0.5 p.p. or even negative (Figure 1.26., Panel C and D). Although this gap is only a proxy, it is indicative of the future interest payment burdens that OECD countries are likely to experience.

Figure 1.26. Yield to maturity at issuance and maturity profile of the outstanding debt stock
Copy link to Figure 1.26. Yield to maturity at issuance and maturity profile of the outstanding debt stock

Higher market yields are slowly raising the costs of servicing outstanding debt

Liquidity and volatility in bond and repo markets

Copy link to Liquidity and volatility in bond and repo markets

With rising collateral availability, liquidity conditions improve

Ample liquidity is essential for the smooth functioning of bond markets and the effective implementation of sovereign issuers’ strategies. When liquidity is low, trading costs increase because even small transactions can cause significant price movements. Conversely, liquid markets can accommodate larger borrowing volumes with minimal impact on prices, allowing debt managers to execute funding strategies efficiently, even amid macro-financial uncertainty or volatility in borrowing needs.

In 2025, liquidity in domestic bond markets reportedly improved in 16 of the 37 countries that answered the annual OECD Survey on Liquidity in Government Bond Secondary Markets. This is the same as in 2024. (Figure 1.27, Panel A). This followed a significant deterioration in liquidity during the monetary tightening cycle that began in 2022. Forty-three per cent represents the highest share of DMOs reporting an improvement in liquidity in at least a decade. Meanwhile, only one DMO reported a decline in liquidity in 2025, which was a record low since at least 2015. Greater demand for supply events and increased trading volumes in secondary markets were the most common reasons for the improvement.

A big part of the reason for higher trading volumes is the greater free float of bonds as a result of several years of quantitative tightening. With fewer bonds sitting on central banks’ balance sheets and not trading at all, trading volumes have naturally increased. Another factor is the greater role of non-banks, in particular leveraged funds as providers of liquidity in bond markets. These actors are typically less likely to hold to maturity than more traditional bond market participants such as banks, or pension funds and insurance companies, and are more likely to trade smaller shorter-term price fluctuations, thus adding to overall liquidity. However, their growing role can also render bond markets more exposed to shocks, as these actors can amplify volatility in periods of heightened market stress (see Chapter 3).

Repo markets are also essential for well-functioning government bond markets because they provide secured funding and liquidity for investors and dealers using government bonds as collateral. They enable market‑making, short‑selling and arbitrage, which support price discovery and keep bond prices aligned across markets. Repo rates also help transmit monetary policy to government bond yields. When repo markets malfunction, funding dries up, and liquidity in government bond markets can deteriorate rapidly.

Over one‑third of respondents who answered the OECD annual Survey on Liquidity in Government Bond Secondary Markets reported improved liquidity in repo markets (Figure 1.27, Panel B). The primary driver of this improvement was the increased free float of government bonds, which increased collateral availability and narrowed the spread between general collateral and specific collateral repo rates.20 Several issuers also cited increased trading volumes as an additional reason.

Finally, although respondent countries in general mostly borrow in their domestic currency, 25 of them also do so in foreign currencies. Amongst these issuers, a lower number (2) experienced an improvement in liquidity in foreign bond markets compared to 2024, and a higher number (3) experienced a decline. The majority saw no change, as has been the case since 2020 (Figure 1.27, Panel C). Weakness in the US dollar in 2025 and growing geopolitical risks were the main reasons given for the decline in liquidity.

Sovereign issuers continue to implement several measures to enhance market liquidity. The most implemented measure in the OECD in 2025 was regularly tapping on-the‑run securities (21 DMOs), ensuring the regular supply of actively traded bonds.21 Buyback and switch operations were also widely used (19 DMOs), allowing debt managers to smooth their redemption profiles and support market liquidity. In 2025, 19 issuers also utilised repos, reverse repos, or securities lending facilities to facilitate trading and strengthen market liquidity. Additionally, 16 DMOs conducted ad hoc taps of off-the‑run securities to provide additional liquidity in typically less liquid bonds.

Figure 1.27. Liquidity conditions in local bond, repo, and foreign bond markets
Copy link to Figure 1.27. Liquidity conditions in local bond, repo, and foreign bond markets

Reported liquidity continues to improve or remain unchanged in bond and repo markets

Sources of volatility have shifted from monetary policy to (geo-)political developments

Alongside the improvement in market liquidity, volatility in government bond markets continued to ease over 2025. The median yield volatility of OECD countries reached its lowest levels since the start of 2022 across the yield curve (Figure 1.28). The pronounced volatility observed in 2022-2023 was largely associated with elevated inflation and the resulting monetary policy tightening. As inflation has returned closer to target, monetary policy changes have been smaller and less frequent, contributing to a moderation in bond market volatility.

Figure 1.28. Bond market volatility
Copy link to Figure 1.28. Bond market volatility

Volatility has broadly declined, with occasional spikes reflecting political events

While volatility has continued to decline overall, the current market landscape remains characterised by occasional volatility spikes, often caused by political developments. Depending on the nature of the shock and its transmission, such episodes may either propagate globally or remain locally contained. The events can become particularly pronounced when they trigger the unwinding of one‑sided leveraged positions. This was the case in April 2025, when long‑term bond yields rose following the announcement of US tariffs. In the US Treasury market, yield increases were amplified by the liquidation of hedge fund positions betting on US Treasuries becoming more expensive relative to interest rate swaps (Financial Times, 2025[23]).

The combination of increased policy uncertainty and worsened fiscal trajectories, on the one hand, and the growing presence of leveraged market participants in certain core government bond markets, on the other, has increased the risk of volatility spikes (see Chapter 3). For issuers, this complicates bond issuance, as higher volatility tends to negatively affect auction demand (Shida, 2023[10]). Diversified and flexible issuance strategies, combined with sound co‑ordination with primary dealer groups, are therefore key to ensuring robust and cost-efficient debt management in the present market conditions.

References

[9] AOFM (2019), Bond issuance methods - tenders versus syndications, https://www.aofm.gov.au/investors/wholesale-investors/investor-insights/bond-issuance-methods-tenders-versus-syndications.

[15] Bloomberg (2025), German Bond Selloff Reignites as Merz Strikes Debt Package Deal, https://www.bloomberg.com/news/articles/2025-03-14/german-bond-selloff-reignites-with-debt-package-in-sight.

[17] Cohen, B., P. Hördahl and D. Xia (2018), “Term premia: models and some stylised facts”, BIS Quarterly Review, pp. 79-91, https://www.bis.org/publ/qtrpdf/r_qt1809h.htm.

[22] D’Amico, S., D. Kim and M. Wei (2018), “Tips from TIPS: The Informational Content of Treasury Inflation-Protected Security Prices”, Journal of Financial and Quantitative Analysis, Vol. 53/1, pp. 395 - 436, https://doi.org/10.1017/S0022109017000916.

[24] Escolano, J. (2010), “A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates”, IMF Technical Notes and Manuals, Vol. 2010/2, https://doi.org/10.5089/9781462396955.005.

[23] Financial Times (2025), How the Treasury market got hooked on hedge fund leverage, https://www.ft.com/content/0bf5bcc2-6ff1-4309-afbf-f470250a4721.

[14] Financial Times (2025), The mounting pressure on bond markets, https://www.ft.com/content/a07d5a72-2691-4da5-aee0-4af5136f737e.

[13] Fitch Ratings (2025), Fitch Affirms Mozambique at ’CCC’, https://www.fitchratings.com/research/sovereigns/fitch-affirms-mozambique-at-ccc-01-08-2025.

[20] Geiger, F. and F. Schupp (2018), “With a little help from my friends: Survey-based derivation of euro area short rate expectations at the effective lower bound”, Deutsche Bundesbank Discussion Paper, Vol. 2018/27, https://doi.org/10.2139/ssrn.3150276.

[6] HM Treasury (2026), The UK Treasury bill market: A consultation document, https://assets.publishing.service.gov.uk/media/695b938653866d6cdff21ad1/The_UK_Treasury_bill_market_-_a_consultation_document.pdf.

[5] Icelandic Parliament (2025), Act No. 620/157 of 2025, https://www.althingi.is/altext/157/s/0620.html.

[16] Jansen, K., W. Li and L. Schmid (2024), “Granular Treasury Demand with Arbitrageurs”, NBER Working Paper No. 33243, https://doi.org/10.3386/w33243.

[19] Joslin, S., K. Singleton and H. Zhu (2011), “A New Perspective on Gaussian Dynamic”, The Review of Financial Studies, Vol. 24/3, pp. 926–970, https://doi.org/10.1093/rfs/hhq128.

[2] Ministry of Finance of Estonia (2024), Estonian government debt and borrowing in 2024, https://www.fin.ee/sites/default/files/documents/2025-02/Estonia%202024%20Debt%20Report_0.pdf.

[21] Nakajima, J. (2026), Shadow rate and term premium estimates for Japan’s yield curve, https://sites.google.com/site/jnakajimaweb/yield.

[3] OECD (2026), Quarterly Public Sector Debt, consolidated, https://data-explorer.oecd.org/vis?fs[0]=Topic%2C1%7CEconomy%23ECO%23%7CNational%20accounts%23ECO_NAD%23&fs[1]=Topic%2C2%7CEconomy%23ECO%23%7CNational%20accounts%23ECO_NAD%23%7CGovernment%20finances%20and%20public%20sector%20debt%23ECO_NAD_GFD%23&pg=0&fc= (accessed on 9 January 2026).

[18] OECD (2025), Global Debt Report 2025: Financing Growth in a Challenging Debt Market Environment, OECD Publishing, Paris, https://doi.org/10.1787/8ee42b13-en.

[25] OECD (2025), OECD Economic Outlook, Volume 2025 Issue 1: Tackling Uncertainty, Reviving Growth, OECD Publishing, Paris, https://doi.org/10.1787/83363382-en.

[1] OECD (2025), OECD Economic Outlook, Volume 2025 Issue 2: Resilient Growth but with Increasing Fragilities, OECD Publishing, Paris, https://doi.org/10.1787/9f653ca1-en.

[4] OECD (2024), Pension Markets in Focus 2024, OECD Publishing, Paris, https://doi.org/10.1787/b11473d3-en.

[12] Scotiabank (2025), Colombia—Financing Strategy Recap and the Market’s Reaction, https://www.scotiabank.com/content/dam/scotiabank/sub-brands/scotiabank-economics/english/documents/latam-insights/lataminsights20251010.pdf.

[10] Shida, J. (2023), “Primary market demand for German government bonds”, Journal of International Money and Finance, Vol. 137, https://doi.org/10.1016/j.jimonfin.2023.102909.

[26] UK DMO (2025), DMO Financing Remit Announcement for 2025-26, https://www.dmo.gov.uk/media/vggggtwy/sa260325.pdf.

[8] US Treasury (2025), Treasury Presentation to TBAC, https://home.treasury.gov/system/files/221/CombinedChargesforArchivesQ22025.pdf.

[7] US Treasury (2024), Quarterly Refunding Statement of Assistant Secretary for Financial Markets Josh Frost, https://home.treasury.gov/news/press-releases/jy2315?utm.

[11] World Bank (2015), Domestic Syndications: Background Note, https://doi.org/10.1596/24087.

Annex 1.A. Methods and sources

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Definitions and concepts used in the Sovereign Borrowing Outlook Survey

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The Borrowing Outlook survey collects gross borrowing requirements, redemption and outstanding debt amounts with a breakdown of these items by maturity, currency, interest rate types and ESG-labelling (i.e. sustainable bonds). It also collects data on DMOs’ holdings, NextGenerationEU loans and country-specific methodological aspects. It uses the core definition of sovereign debt, and central government marketable debt, mainly due to its comparability and collectability. This measure, directly linked to the central government budget financing, enabled the OECD to collect not only for realisations but also for estimates of government borrowing requirements, funding strategies, as well as outstanding debt with instruments, maturity and currency types.

Coverage of institutions: Central government

The coverage of institutions by debt statistics varies from public sector to central government. Public sector represents the broadest institutional coverage, as it includes local governments, state funds financial and non-financial public corporations as well as central government debt. The general government definition, which is used for example by the OECD System of National Accounts (SNA), consists of central government, state and local governments and social security funds controlled by these units. Central government covers all departments, offices, establishments and other bodies classified under general government, which are agencies or an instrument of the central authority of a country, except for separately organised social security funds or extra-budgetary funds. In terms of layers of coverage of institutions, central government stands out as the core definition. Debt of the central government is raised, managed and retired by the national DMOs on behalf of the central government. Hence, the advantage of this relatively narrow definition of debt is that it enables countries to provide comparable figures, in particular for the purpose of estimations.

Coverage of types of debt: Marketable debt

In terms of instruments, liabilities can be in the form of debt securities, loans, insurance, pensions and standardised guarantee schemes, currency and deposits, and other accounts payable. Debt items can be classified as marketable and non-marketable debt. While marketable debt is defined as financial securities and instruments that can be bought and sold in the secondary market, non-marketable debt is not transferable. For example, bonds and bills issued in capital markets are marketable debt; multilateral and bilateral loans from the official sector are non-marketable debt.

The Borrowing Outlook survey focusses on marketable debt instruments, while most government debt statistics (e.g. OECD SNA, EU Maastricht debt, and IMF Public Sector Debt Statistics) cover both marketable and non-marketable debt items. OECD governments are financed predominantly by marketable debt instruments. This is a central definition for every analysis concerning various issues around debt management including borrowing conditions, portfolio composition, investor preferences and market liquidity. An advantage of using this definition is to indicate to investors which instruments are available to trade in the secondary markets, and which are not. Another reason is to enable the issuer to calculate different characteristics of the debt, such as duration or time to maturity, which in the case of non-marketable debt would present a difficult issue.

Terminology

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The standardised gross borrowing requirement (GBR) for a year is equal to the net borrowing requirement during that year plus the redemptions of long-term instruments in the same year and the redemptions of short-term instruments issued in the previous year. Therefore, this indicator captures the issuances of all securities excluding those that were issued and redeemed in the same calendar year. In other words, the size of GBR in the calendar year amounts to how much the DMO needs to issue in nominal terms to fully pay back maturing debt issued in previous years plus the net cash borrowing requirement through any issuance mechanism.
Net borrowing requirement (NBR) is the amount required to finance the current budget deficit. While the refinancing of redemptions is a matter of rolling over the same exposure as before, NBR refers to new exposure in the market, or new borrowing.
Gross debt, or debt stock, corresponds to the outstanding debt issuance at the end of calendar years. This measure does not take the valuation effects from inflation and exchange rate movements; thus, it is equal to the total nominal amount that needs to be redeemed.
Redemptions refer to the total amount of the principal repayments of the corresponding debt including the principal payments paid through buy-back operations in a calendar year.

Regional aggregates

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Total OECD area denotes the following 38 countries: Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Türkiye, the United Kingdom and the United States.
OECD accession candidate countries include Argentina, Brazil, Bulgaria, Croatia, Indonesia, Peru, Romania and Thailand.
The G7 includes Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
The euro (EUR) is the official currency of 21 out of 27 EU Member States. These are collectively known as the Euro area. The Euro area countries are Austria, Belgium, Bulgaria, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, the Slovak Republic, Slovenia and Spain.
The OECD Euro area includes 17 countries: Austria, Belgium, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Portugal, the Slovak Republic, Slovenia and Spain.
In this chapter, the Euro area covers only the countries that are simultaneously in the Euro area and in the OECD.

Calculations and data sources

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For consistency reasons, estimates that are presented as a percentage of GDP use GDP estimates from the last OECD Economic Outlook in the previous year (i.e. December 2025 for this publication) and are calculated using nominal GDP data.
Debt is measured as the nominal value of current outstanding central government debt. Nominal value, the undiscounted amount of principal to be repaid, does not change except when there is a new issue of an existing instrument. This coincides with the original promise (and therefore contractual obligation) of the issuer. DMOs often use face value when they report how much nominal debt will mature in future periods. One important reason for using face value is that it is the standard market practice for quoting and trading specific volumes of a particular instrument.
Currencies are converted into USD using the respective historical exchange rates, with the data sourced from London Stock Exchange Group (LSEG).
All figures are expressed in calendar years unless specified otherwise.
All statistics (e.g. median, averages) displayed in figures consider only the countries in the figure and may not include all OECD Members.
Aggregate figures for gross borrowing requirements (GBR), net borrowing requirements (NBR), central government marketable debt, redemptions, and debt maturing are compiled from answers to the Borrowing Survey. The OECD Secretariat inserted its own estimates/projections in cases of missing information for 2025 and 2026, using publicly available official information on redemptions and central government budget balances. Where government plans have been announced, but not incorporated into financing plans as of the end of December 2025, they are not included in the projections presented in this publication. Also, the latest estimates of government net lending in the OECD Economic Outlook database are used in estimating some missing data.
Both the 2025 OECD Survey on Primary Market Developments and the 2025 OECD Survey on Liquidity in Secondary Government Bond Markets were carried out in September 2025.

Other definitions

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Treasury bills have an original maturity that is less than or equal to one year at the primary issuance. This definition excludes other short-term instruments in the money market, like outstanding commercial paper or instruments for liquidity management (cash).
Inflation-linked securities are instruments with coupon and/or principal payments that are linked to an inflation index. The data includes accrued inflation for all years up to and including the current year of the survey as of the reporting date.
Variable‑rate notes have a floating or variable interest rate or coupon rate. It is a long-dated debt security whose coupon is refixed periodically on a “refix date” by reference to an independent interest rate index such as SONIA or Euribor. For example, medium and long-term floating rate notes (FRNs, colloquially known as floaters) are debt obligations with variable interest rates that are adjusted periodically (typically every one, three, or six months). The interest rate is usually fixed at a specified spread over one of the interest rate indices. For projections of variable‑rate debt, the rate at the level of the last settled coupon is used.
Average term-to-maturity figures follow the same coverage described at the beginning of this Annex, with country-specific methods detailed below:
- Australia: The average term to maturity is calculated as the average of the tenors of each instrument (including Treasury Bonds, Treasury Indexed Bonds and Treasury Notes) weighted by the face value on issue and is calculated as of 31 December of the given year.
- Canada: The numbers differ slightly from Canada’s publicly reported ATM on its annual Debt Management Reports – as the ATM numbers reported here assume a calendar year end, and Canadian public reporting assumes a fiscal year end.
- Germany: Calculation excluding holdings in own stock. Inflation-linked securities are weighted with 0.75.
- Hungary: Data excludes retail securities, locally issued FX bonds, and loans and, since 2020, also excludes the non-marketable bonds issued to municipalities. Data includes cross-currency swaps.
- Israel: Data is for the whole debt (both tradable and non-tradable, domestic and foreign).
- Italy: Liabilities under the Support to mitigate Unemployment Risks in an Emergency and Next Generation EU programmes are excluded. If considered, the ATM is 7.4 years at end-2025.
- Japan: Figures are based on fiscal year (as of the end of March) and excludes T-bills for cash management purposes. Figures from 2006 to 2024 exclude saving bonds for retail. The figure for 2025 is estimated and includes saving bonds for retail.
- Netherlands: These figures pertain to government bonds and treasury bills only.
- New Zealand: Figures include all New Zealand Government Bonds, T-bills and Euro-Commercial Paper computed using the exchange rate as of 31 December.
- Sweden: Data as of end of year. It includes government bonds, inflation-linked bonds, public bonds in foreign currencies, green bonds and T-bills.
- United Kingdom: ATM is weighted by the nominal amounts outstanding of gilts and T-bills issued for debt management purposes, as of the reporting date. Nominal amounts of gilts include government holdings; nominal values of index-linked gilts also include accrued inflation as of the reporting date.

Debt decomposition model

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Single countries

To compute the debt-decomposition of OECD countries, this chapter adopted the methodology outlined by Escolano (2010[24]) and used the equation below to capture the change in debt-to-GDP ratio between time t and t‑1:

$d - d_{(t - 1)} = \frac{i p}{(1 + y)} * d_{(t - 1)} - \frac{π}{(1 + y)} * d_{(t - 1)} - \frac{g}{1 + g} * d_{(t - 1)} - p b + s f$

Where:

d is the central government debt stock from the Borrowing Survey expressed as a ratio to GDP from OECD (2025[25]).
ip is the effective interest rate, expressed as general government gross interest expenses from OECD (2025[25]) in time t as a ratio of the central government debt stock from the Borrowing Survey in time t‑1
y is the nominal GDP growth rate from OECD (2025[25]) between time t and t‑1
π is inflation, defined as the change in GDP deflator from OECD (2025[25]) between time t and t‑1
g is the real GDP growth rate from OECD (2025[25]) between time t and t‑1
pb is the general government’s primary balance as a ratio of GDP, both from OECD (2025[25])
sf denotes the stock-flow adjustments.

OECD area

For the OECD area decomposition, the following variables are used:

d is the sum of each country’s central government debt stock divided by the sum of each country’s GDP
ip is the sum of each country’s general government gross interest payments divided by the sum of each country’s central government debt stock from the Borrowing Survey at time t‑1
y is the growth rate of the sum of each country’s nominal GDP
π is the sum of each country’s π, weighted by GDP
g is the sum of each country’s g_,weighted by GDP
pb is the sum of each country’s general government primary balance, divided by the sum of each country’s GDP
sf denotes the stock-flow adjustments

To compute OECD area values, country figures were converted into US dollars using the year-end exchange rates, sourced from LSEG.

Further specifications

Computations did not cover CHL, COL, CRI, ISR, MEX and TUR due to missing general interest expenses data. Thus, computations cover around 97% of total OECD central government debt.

Annex 1.B. Sustainable bonds

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Over the last five years, sustainable bonds have become a more important source of capital market financing. Globally, the total volume of sustainable bonds issued by the corporate and official sectors was three times larger in 2021-2025 than in 2016-2020. Issuance peaked in 2021, with total issuance of USD 740 billion by corporates and USD 629 billion by the official sector (Annex Figure 1.B.1, Panel A). In 2025, global volumes totalled USD 531 billion and USD 486 billion, respectively. Issuance declined slightly in 2025, falling by 6% compared with 2024 and by 26% relative to 2021. Green bonds remained the dominant category in 2025, with USD 420 billion issued by corporates and USD 238 billion by the official sector (Annex Figure 1.B.1, Panel B).

Annex Figure 1.B.1. Global sustainable bond issuance by issuer
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Between 2016-2025, Europe dominated global sustainable bond issuance in both the corporate and official sectors. It accounted for nearly half of non-financial corporate issuance (46%), followed by China (18%) and the United States (13%). Europe also dominated financial corporate issuance, accounting for more than half (54%), above China (17%), Developed Asia-Pacific excluding the US (15%), and the United States (6%) (Figure 1.B.2, Panel A).

In the official sector, sustainable bonds issued by central governments during the same 2016-2025 period were mainly issued in Europe (65%), followed by Latin America (15%). European issuers also dominated issuance by agencies and local governments (58%), followed by issuers in Developed Asia-Pacific excl. US (30%) (Annex Figure 1.B.2, Panel B).

Annex Figure 1.B.2. Global sustainable bond issuance by region
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Before 2020, most corporate sustainable bonds were green bonds, representing 92% of annual issuance on average (Annex Figure 1.B.3, Panel A). In 2020, social bond issuance by corporates nearly tripled and then peaked in 2024 at USD 45 billion. In 2025, green bonds represented 79% of the total corporate sustainable bond market, while sustainability-linked bonds (SLBs), sustainability bonds, and social bonds made up 6%, 9%, and 6%, respectively.

Green bond issuance is less prevalent in the official sector than in the corporate sector, averaging 49% of total volumes over the past three years. Alongside green bonds, governments and multilateral institutions have issued social (19%) and sustainability (30%) bonds frequently over the last three years (Annex Figure 1.B.3, Panel B). SLBs were issued for the first time by central governments and multilateral institutions in 2021, but account for only 1% of sustainable bonds issued in the official sector over the last three years.

Annex Figure 1.B.3. Global sustainable bond issuance by type
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Annex 1.C. EMDE marketable debt calculations

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Primary sovereign bond market data and country groupings

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Primary sovereign bond market data are based on original OECD calculations using data obtained from LSEG that provides international security-level data on new issues of sovereign bonds. The data set covers bonds issued by emerging market sovereigns in the period from 1 January 2007 to 31 December 2025 and includes both short-term and long-term debt. Short-term debt (“bills”) is defined as any security with a maturity less than or equal to 365 days but no less than 33 days, as bill issuances with a maturity less than 33 days are considered to be done for cash management purposes and excluded from calculations. Bonds issued by central banks that have no government budget financing purposes were excluded. The data provides a detailed set of information for each bond issue, including the proceeds, maturity date, interest rate and currency structure.

The definition of emerging markets used in this report is consistent with the IMF’s classification of Emerging Markets and Developing Economies used in its World Economic Outlook. The income categories used (high income, low income, lower middle income, upper middle income) are those from the World Bank as of 2025, which are based on GNI per capita levels.

A number of bonds have been subject to reopening. For these bonds, the initial data only provide the total amount (original issuance plus reopening). To retrieve the issuance amount for such reopened bonds, specific data on the outstanding amount on each reopening date for the concerned bonds have been downloaded separately from LSEG. As the reopening data only provide amounts outstanding, the outstanding amount on the previous date is subtracted from the outstanding amount on that given date, in order to obtain the issuance amount on each relevant date. These calculated issuance amounts are converted on the transaction date using USD foreign exchange data from LSEG. To ensure consistency and comparability, the same method is used for all bonds, including those which have not been subject to reopening.

Gross borrowing equal to the net borrowing requirement during each year plus the redemptions of long-term instruments in the same year and the redemptions of short-term instruments issued in the previous year. Therefore, this indicator captures the issuance of all securities excluding those that were issued and redeemed in the same calendar year. In other words, gross issuance in the calendar year amount to how much the country issued in nominal terms to fully pay back maturing debt issued in previous years plus the net cash borrowing requirement through any issuance mechanism. This follows the same method to compute gross issuance in Chapter 1 and is referred as the standardised method.

Outstanding debts in local currency are converted to USD using end-of-year foreign exchange rates.

Exchange offers and certain bonds in the dataset have been manually excluded when they did not have any identifier (ISIN, RIC or CUSIP) and when they have not been able to be manually confirmed by comparing with official government data.

For the issuance figure in the infographic, gross borrowing in 2026 for EMDEs is estimated as the average ratio between gross borrowing and refinancing requirements for each year between 2007 and 2025, multiplied by 2026 refinancing requirements as of 31 December 2025. See Chapter 2 for 2026 corporate bond estimations methodology.

Credit ratings data

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LSEG provides rating information from three leading rating agencies: Fitch, Moody’s, and S&P. For each country with rating information in the dataset, a value of 1 is assigned to the lowest credit quality rating (C or below) and 21 to the highest credit quality rating (AAA for Fitch and S&P, and Aaa for Moody’s). Non-investment grade categories include ratings up to BB+ for Fitch and S&P, and up to Ba1 for Moody’s.

The rating in question is then assigned to each relevant bond issued by that country (as at issuance or transaction date). If ratings are available from several agencies, their average is used. Final ratings are categorised as follows: those equal to or higher than 15 are classified as Investment Grade A (IG A); ratings falling between 12 and 14 are designated as Investment Grade BBB (IG BBB); ratings between 9 and 11 are categorised as non-Investment Grade BB (SG BB); and ratings below 9 are classified as Single B high risk (Single B and below). Within the high-risk category, ratings equal to or lower than 3.5 indicate a default or very high risk of default.

When computing the number of upgrades and downgrades, ratings data are observed on a monthly basis, excluding those equal to 1. If a country has received several ratings from the same agency in one month, the latest one is used.

The weighted debt quality analysis uses rating information from three rating agencies (Fitch, Moody’s and S&P). The rating valid at the end of the year for a country is assigned to the totality of its outstanding debt stock. The share is then computed as a stock-weighted average across rating groups.

Annex 1.D. Single country yield curves

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Annex Figure 1.D.1. Yield curves of selected OECD countries
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Notes

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← 1. The USD depreciated by 12% against the EUR from the end of 2024 to the end of 2025 and by 7% against the GBP.

← 2. Eight countries reported a decrease of at least 1 p.p., with Costa Rica, Germany and the Netherlands experiencing the largest decreases.

← 3. The Japanese budget deficit, as measured by the general government net lending, decreased from 1.42% of GDP to 0.56% (OECD, 2025[1]).

← 4. These eight countries are: Chile, Czechia, Greece, Ireland, Portugal, Spain, Sweden and Switzerland. In this case, a change is considered stable if it is lower than a half p.p.

← 5. The largest decreases are estimated for Israel (4 p.p.), Türkiye (2 p.p.) and New Zealand (2 p.p.).

← 6. Germany also introduced a 20‑year line for the first time in 2026, reflecting market demand, but this did not mark a departure from the initial annual funding plans.

← 7. From two to one.

← 8. The fiscal year in the UK spans the 12 months from April to March. The UK DMO announced in March 2025 that it would introduce programmatic gilt tenders in 2025‑2026 to assist with the delivery of its financing remit. It stated that these operations will typically involve the sale of “off-the-run” gilts, and it is envisaged that gilts maturing within the financial year will be excluded. However, the approach is designed to be adaptable to take account of the overall programme and operations calendar composition and will be informed by relevant feedback received during consultation processes. Tender dates and choice of maturity sectors for all programmatic gilt tenders remain subject to demand and market conditions prevailing at or around a tender date. The UK DMO stated that it will consider a range of factors in deciding the gilt to be offered at each tender, including feedback about demand and market conditions, as well as broader debt management considerations (including the cash amount raised, value for money, and the impact of issuance on the gilt redemption profile). Market participants will be consulted on the identity of the gilt and the maximum size to be offered at each gilt tender ahead of the planned gilt tender date. These will typically be confirmed at least two business days before the planned tender date. Proceeds from the UK DMO’s programmatic gilt tenders will be drawn down from the unallocated portion of issuance. The UK DMO will publish any such transfers on the day that they take place by updating and re‑publishing the table showing the evolution of the unallocated portion of issuance in 2025‑2026 that is available on the “Remit” section of the UK DMO’s website. (UK DMO, 2025[26]).

← 9. Australia, Chile, Iceland, Mexico, New Zealand, Poland, the Slovak Republic, and Spain.

← 10. Note that the Sovereign Borrowing Outlook uses the standard methodology to calculate gross borrowing and refinancing needs, excluding the refinancing of T-bills issued and maturing within the same year. For further details, see Annex 1.A.

← 11. The United States is the OECD country with the highest share of outstanding debt made of T-bills, at around 22%.

← 12. The composition of outstanding central government marketable debt will also include non-standard instruments such as sustainable bonds. Annex 1.B provides more information on trends in the issuance of sustainable bonds globally by corporate and official sectors.

← 13. Percentages do not add up to 100 due to rounding.

← 14. In January 2025, the Swedish target was for inflation-linked debt decreased from 20% of the total to 80 billion Swedish krona at the end of 2029, which the DMO sees as probably amounting to about 5‑10% of the total in that year.

← 15. Note that the Sovereign Borrowing Outlook considers only central government marketable debt, see Annex 1.A.

← 16. This also reflects the higher starting point of Japan’s public debt, via the so-called snowball effect.

← 17. In Denmark, Ireland, Lithuania, Sweden, Slovenia, and Türkiye, the 2025 debt-to-GDP ratio was not only lower than in 2024 but also near the lowest levels from the past ten years.

← 18. In December 2025 the Central Bank of Iceland cut its main policy rate to 7.25%. Markets are currently pricing further easing which explains the inversion of the yield curve of Iceland.

← 19. This simple framework abstracts from the fact that some investors might hold long-term bonds with specific maturities to match certain liabilities.

← 20. General collateral (GC) refers to repo transactions where the lender accepts any bond with certain characteristics as collateral, while specific collateral (SC) repo are transactions where a particular bond is required. The difference between SC and GC reflects the scarcity or specialness of a specific bond.

← 21. On‑the‑run securities are the most recently issued government bonds of a given maturity and are typically the most liquid. Off‑the‑run securities are older issues of the same maturity that have been superseded by newer ones and are usually less liquid.

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