$365 Trillion And Rising: Inside The World’s Debt Rollover Crunch

Global debt grew by more than $10 trillion in the first half of 2026, surpassing $365 trillion; emerging markets accounted for the bulk of the rise. According to data in the Institute of International Finance’s ‘A Debt-intensive Future—and Growing Risks for Global Markets,’ the rise “is less than half of the $21 trillion increase recorded in the same period last year, reflecting pressure from rising interest rates, higher debt-service costs, surging energy prices, and the impact of the conflict with Iran on issuer sentiment. The moderation was most evident among financial institutions and households—the sectors most sensitive to interest rates—although overall debt growth remained above its five-year average. Governments and nonfinancial corporates accounted for most of the increase, with both sectors reaching fresh record highs.”

Strategic Drivers Behind Rising Debt

Global debt tops $365 trillion in the first half of 2026; debt-to-GDP ratios are kept in check by inflation. Unlike previous cycles driven purely by post-pandemic recovery or low interest rates, the recent accumulation of debt is fueled by strategic capital expenditure “supercycles”:

• Tech & AI Infrastructure: A non-financial corporate “technological arms race” in artificial intelligence and data center infrastructure pushed corporate debt ratios up significantly.
• Defense & Security Spending: Rising defense commitments—particularly across European Union member states—are projected to add up to 18 percentage points to EU government debt-to-GDP ratios over the next decade.

Government and Sovereign Concentration

Sovereign borrowing accounts for most of the new global debt accumulation. Three major regions—the United States, China, and the Eurozone—are responsible for roughly three-quarters of the net global debt increase. The U.S. government debt ratio continues to trend upward (surpassing 122% of GDP), while China’s combined government and corporate leverage also set new records.

IIF data shows that average government borrowing costs across the G7 are now at their highest since mid-2008, while annual interest expenses are nearly 85% higher. “Over the past year, advanced economies paid over $3.5 trillion in interest on internationally traded government bonds alone—more than estimated global spending on AI ($2.6 trillion), defense ($3.1 trillion), or energy ($3.4 trillion).”Divergence Between Emerging and Mature MarketsTotal debt and debt-to-GDP ratios in emerging markets hit record highs (above 235% of GDP), driven by elevated borrowing in nations such as South Africa, Argentina, and Egypt. While debt volumes remain vast, debt-to-GDP ratios in mature economies have experienced slight stabilization or moderate dilution due to underlying nominal economic growth.

Heightened Refinancing and Rollover Risks

Global financial markets face an unprecedented wall of maturing debt. Emerging markets alone face over $9 trillion in redemptions, while mature markets must refinance more than $20 trillion in maturing bonds and loans. S&P Global Ratings puts total rated corporate maturities between 2025 and 2029 at roughly $12.4 trillion, split between $9.0 trillion in investment-grade debt and $3.4 trillion in speculative-grade paper that is far more exposed to any rise in borrowing costs. The arithmetic is unforgiving for issuers that locked in ultra-low rates during the pandemic: a company that borrowed at 2.5% in 2020 can now face all-in refinancing costs of 5% to 7%, a jump that is structural rather than temporary for heavily leveraged borrowers. Thus far, the wall is being scaled without visible distress—investment-grade spreads have hovered near a 20-year low, and steady demand from insurers, pension funds, and foreign buyers has absorbed record issuance—but that calm carries a cost. Much of the new borrowing is being driven by a handful of hyperscalers financing AI data-center buildouts, concentrating rollover risk in a narrow slice of the market with little precedent for how it would perform under stress. 

Source: forbes