Governments and companies borrowed a record USD 25 trillion from markets in 2024 USD 10 trillion more than pre-COVID levels and nearly three times the amount raised in 2007 according to the latest OECD report.
The OECD Global Debt Report 2025: Financing Growth in a Challenging Debt Market Environment projects further debt increases in 2025. The aggregate central government marketable debt-to-GDP ratio in OECD countries is expected to reach 85 percent more than 10 percentage points higher than in 2019 and nearly double the 2007 level.
Despite falling policy rates, bond yields in key markets rose, and both sovereign and corporate debt increased. This combination of rising costs and higher debt levels poses challenges for future borrowing, especially given significant investment needs. Much of the past borrowing—stemming from the 2008 financial crisis and the COVID-19 pandemic—was used to cushion economic shocks and aid recovery. Looking ahead, substantial new investment will be required to drive long-term growth, enhance productivity, address population aging, and meet defense needs.
Debt Outlook and Borrowing Costs
“Sovereign and corporate debt levels continue to grow across the world at a time of increasing borrowing costs and market volatility,” said OECD Secretary-General Mathias Cormann. “Improving the efficiency of public spending, prioritizing government borrowing for productivity-enhancing investments, and ensuring corporate borrowing contributes to productive capacity will be key to improving debt sustainability.”
Sovereign bond issuance in OECD countries is projected to hit a record USD 17 trillion in 2025, up from USD 14 trillion in 2023. Outstanding sovereign debt is expected to rise from USD 54 trillion in 2023 to nearly USD 59 trillion in 2025.
In emerging markets and developing economies, sovereign borrowing from debt markets has also surged from around USD 1 trillion in 2007 to over USD 3 trillion in 2024, with a 12 percent increase in issuance last year. China accounted for 45 percent of total issuance in 2024, compared to just 17 percent during 2007–2014.
Corporate Debt and Refinancing Risks
The global stock of corporate bond debt reached USD 35 trillion by the end of 2024, resuming a long-term upward trend that briefly paused in 2022. Most of this increase has been driven by non-financial issuers, whose debt has nearly doubled since 2008.
Rising borrowing costs are beginning to have an impact. Government interest payments as a share of GDP rose in about two-thirds of OECD countries in 2024, reaching 3.3 percent—0.3 percentage points higher than in 2023. This means that interest payments now exceed total defense spending across the OECD. Refinancing risks are also mounting, with nearly 45 percent of sovereign debt in OECD countries set to mature by 2027. Additionally, about one-third of all outstanding corporate bond debt will need to be refinanced within the next three years.
Notably, much of the recent corporate debt has been used for financial operations such as refinancing and shareholder payouts rather than investment in productivity-enhancing projects.
Shifts in Sovereign Debt Markets
Central banks continued reducing their holdings of sovereign debt in 2024. In OECD economies, central bank ownership of domestic sovereign bonds fell from 29 percent of total outstanding debt in 2021 to 19 percent in 2024. Meanwhile, domestic household holdings increased from 5 percent to 11 percent, and foreign investor holdings grew from 29 percent to 34 percent.
For debt levels to remain stable, either existing investors must purchase more debt, or new potentially more price-sensitive—investors must enter the market, which could heighten market volatility.
Climate Financing and Debt Markets
A special section of this year’s report examines the financing needed to achieve global climate objectives. At the current pace of public and private climate transition investment, advanced economies would not align with the Paris Agreement goals until 2041. The challenge is even greater for most emerging markets, which are unlikely to meet the Paris Agreement targets before 2050.
Higher levels of public sector climate financing would significantly increase public debt-to-GDP ratios in the coming decades. Alternatively, greater reliance on private sector funding would require rapid capital market development and a surge in debt issuance. The report emphasizes the need for financial regulation reforms to unlock debt markets’ potential for financing the climate transition, particularly by fostering capital market growth in emerging economies.
