Global debt tops $365T as refinancing costs rise

That matters because the world is entering a phase where debt is still rising, but the cost of carrying it is rising faster. The IIF said the increase was less than half the $21 trillion added in the same period a year earlier, reflecting the impact of higher rates and borrowing costs. U.S. Treasury yields have surged to multi-year highs, lifting the expense of rolling over obligations just as governments face heavier fiscal demands and companies confront a more selective credit market.

For investors, that changes the opportunity set. When debt markets are under pressure, capital typically rotates toward balance-sheet strength, pricing power and funding resilience. It also raises the value of the market’s toll roads: lenders with disciplined underwriting, asset managers with dry powder, and infrastructure and energy businesses that can pass through inflation. By contrast, highly leveraged sovereigns, weaker EM borrowers and lower-quality credits are the first places where stress can surface.

The report also underscores how much of the latest borrowing came from governments and non-financial corporates, both of which reached fresh records. That is a warning sign for bondholders, because it means leverage is not being confined to one sector. It is becoming more embedded in the real economy, where slower growth can quickly turn into weaker tax receipts, narrower margins and more refinancing pressure.

The global debt ratio stands near 310% of GDP, below the peak hit in early 2021, but that improvement is largely an inflation effect rather than true deleveraging. In other words, nominal GDP is masking the burden rather than eliminating it.

The investment thesis here is straightforward: this is a credit-cycle story, not just a macro statistic. I believe the market underestimates how much sustained high rates can reorder winners and losers over the next several quarters. In this environment, quality duration, Treasury exposure and high-grade credit remain the defensive core, while leveraged borrowers, fragile sovereigns and speculative junk credit look increasingly vulnerable. If debt continues to outpace growth, the next phase of the cycle will be defined less by easy financing and more by scarcity of capital.