Global debt growth has become one of the defining structural trends shaping capital markets. This report examines how government and corporate borrowing expanded from approximately $80 trillion in 2000 to $318 trillion in 2024, driven by repeated economic intervention cycles and a prolonged period of historically low interest rates.
On the sovereign side, debt levels accelerated through successive periods of fiscal support and crisis response, including the dot-com downturn, the Global Financial Crisis, and the COVID period. At the same time, corporations operated in an environment where low financing costs encouraged greater use of debt capital. The report highlights that these trends are now intersecting with a materially different rate environment.
A central focus of the analysis is refinancing pressure. As debt matures and must be rolled over at higher interest rates, governments and corporations may face increased financing costs, tighter fiscal flexibility, and greater sensitivity to interest rate movements. The report also notes that a growing share of investment-grade corporate issuance now sits at the lower end of the rating spectrum, which may increase credit sensitivity during periods of economic stress.
From a portfolio construction perspective, the report explores how sustained debt growth and higher borrowing costs may affect traditional asset allocation assumptions. It discusses the implications for duration exposure, fixed income positioning, credit quality assessment, and the role of assets with different inflation and interest rate characteristics.
Topics covered include global debt expansion, sovereign borrowing, corporate credit markets, refinancing risk, duration management, asset allocation, and portfolio construction in a higher-rate environment.