For CFOs planning capital allocation for 2026 and past, the headline quantity is tough to disregard: International debt has surged to almost $346 trillion within the third quarter of 2025, or about 310% of world GDP, in keeping with a report from the Institute of Worldwide Finance (IIF).
Whereas bond markets stay open and company spreads are traditionally tight, authorities borrowing—particularly within the US and Europe—is accelerating at a tempo that would reset curiosity prices and reshape liquidity planning and balance-sheet technique.
Mature markets largely account for the rise in debt. The US and China lead, however France, Germany, and the UK have additionally notched important will increase. Rising markets have reached a brand new excessive of greater than $115 trillion, with Brazil, Russia, South Korea, Poland, and Mexico following China in debt accumulation.
Authorities borrowing is driving the surge, says Emre Tiftik, director of Sustainability Analysis on the IIF, who co-authored the report. “With price range deficits nonetheless elevated—and the affect of huge fiscal stimulus packages set to kick off in 2026 in Japan, the US, Germany, and China—sovereigns are prone to proceed including to their debt burdens and curiosity bills,” he says.
The company sector presents one other dimension of concern, with nonfinancial company debt near the $100 trillion threshold, notably at companies investing in AI, clear power, and protection. Tech firms, which historically financed progress by way of inside money flows, are actually tapping bond markets. The IIF report notes a shift towards extra lively use of bond markets, expanded financial institution borrowing, and extra reliance on personal debt.
Regardless of considerations about rising authorities debt ranges, Marc Chandler, chief market strategist at Bannockburn Capital Markets, affords a extra measured take: “There was discuss of a debt disaster for a number of years, however I’m not persuaded it’ll hit in 2026.”
Funding-grade company borrowing stays sturdy, he factors out, suggesting that elevated authorities debt has not but considerably crowded out private-sector entry to capital. For company leaders navigating this setting, Jean-Baptiste Wautier, an investor and a co-founder of Wautier Household Workplace, who additionally serves on the board of Pershing Sq. Holdings, suggests creating liquidity “buffers” in case of macro shocks whereas additionally taking benefit of the present potential to lift capital at a few of the tightest spreads in a very long time.
“Decelerate momentary buybacks and dividends however take into account strategic M&Some time capital markets are large open,” he advises.
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