Global debt hits record US$353 trillion as investors begin diversifying away from US bonds
Global debt climbed to a record near US$353 trillion by the end of March, with the IIF saying investors are showing growing interest in Japanese and European bonds over US Treasuries.
The latest report shows global debt has risen to a record nearly US$353 trillion as of the end of March 2026, while international investors are beginning to rebalance their portfolios and reduce their reliance on US government bonds.
According to the Institute of International Finance (IIF), demand for Japanese and European government bonds has increased significantly, in contrast to demand for US Treasuries, which has broadly plateaued since the start of the year. The shift reflects a wider move by investors to diversify risk across global financial markets.
Emre Tiftik, director for sustainability research at the IIF, said that although the US Treasury market, worth more than US$30 trillion, is not facing immediate short-term danger, the long-term path of US public debt is beginning to look potentially unsustainable under current policies. By contrast, debt ratios in the eurozone and Japan are seen as edging lower.
The report also said that, under current policy settings, the US debt-to-GDP ratio is likely to keep rising, while the US private bond market continues to expand strongly, supported by AI-related corporate debt issuance and foreign capital inflows.
In the first quarter alone, global debt increased by more than US$4.4 trillion, the fastest rise since mid-2025, and the fifth consecutive quarterly increase. Much of that increase came from borrowing in the United States and by Chinese state-owned firms.
At the same time, emerging markets excluding China saw debt rise to a record US$36.8 trillion, driven mainly by public-sector borrowing. Overall, global debt stood at about 305% of world GDP, broadly unchanged from levels seen since 2023, although the trend differs between advanced and developing economies.
The report said the countries with the biggest rises in debt ratios were Norway, Kuwait, China, Bahrain and Saudi Arabia, each up by more than 30 percentage points of GDP. The IIF also warned that structural pressures such as ageing populations, defence spending, energy security, cyber security and investment in artificial intelligence are likely to keep both public and private debt rising over the medium to long term. It added that the latest conflict in the Middle East is likely to intensify those pressures further.
