Governments and companies are projected to borrow $29 trillion from bond markets in 2026. Much of that borrowing will replace securities sold when money was cheaper. As those bonds mature, current interest rates move into public budgets and corporate accounts.
The OECD’s Global Debt Report 2026 puts the combined sovereign and corporate bond market at $109 trillion. Projected borrowing this year is $4 trillion higher than in 2024 and roughly twice the amount raised a decade ago. Refinancing accounts for an expected 78 per cent of borrowing by OECD governments.
Bond markets continue to function, and many borrowers still have access to finance. Measured volatility has often remained low. The maturity schedule shows where pressure is building even during calm trading.
How higher rates enter the budget
A ten-year bond issued at a low coupon keeps that cost until it matures. The higher rate enters the budget when the bond is replaced or when a government funds a new deficit at current yields. The International Monetary Fund estimates that global interest payments rose from about 2 per cent to nearly 3 per cent of GDP in four years as maturing obligations were rolled over.
Global public debt rose to just under 94 per cent of GDP in 2025, according to the IMF, and is projected to reach 100 per cent by 2029. The same debt ratio can carry different risks. Maturity, currency, coupon and ownership determine how quickly market conditions reach a borrower. A government borrowing at long maturities in its own currency from domestic investors faces a different schedule and currency exposure from one that depends on short-term foreign-currency debt and external demand.
Expensive long-term borrowing has encouraged some issuers to choose shorter maturities. That reduces the immediate coupon and brings the next refinancing date closer. The OECD reported that 30-year yields rose across most member countries in 2025 even as shorter rates stabilised. The shift can place more redemptions into the next few budgets.
Central banks accumulated unusually large holdings of government bonds during years of asset purchases. As they reduce those holdings, other investors must absorb more new supply. Those buyers are often more sensitive to price, leverage and short-term returns. Governments may have to offer higher yields or adjust policy sooner when investors demand a larger risk premium.
Interest claims more of the budget
For wealthier sovereign borrowers, higher interest costs usually reach the budget before they threaten repayment. Money used for debt service is unavailable for infrastructure, social protection, defence or climate adaptation. Governments then choose among higher taxes, slower spending, additional borrowing and policies intended to raise growth. Public investment can be vulnerable during that process even when it would support future growth.
The pressure is heavier in developing economies. The World Bank’s International Debt Report 2025 records $8.9 trillion in external debt for low- and middle-income countries at the end of 2024. Those countries paid a record $415 billion in interest. The 78 countries eligible for the World Bank’s cheapest financing and grants owed $1.2 trillion. The aggregate figures cover countries with different circumstances. They also show the scale of income committed before domestic spending begins.
Weak growth makes the calculation harder. The World Bank’s June 2026 Global Economic Prospects projected world growth of 2.5 per cent for the year, the weakest pace outside a global recession in nearly two decades. It estimated that by the end of 2026, one quarter of developing economies, one third of low-income economies and half of fragile and conflict-affected economies would still be poorer per person than in 2019. A rising interest bill is harder to absorb when the income base has yet to recover.
Incomplete disclosure can add to the cost. A World Bank analysis of episodes in which hidden public liabilities were revealed found significant increases in sovereign spreads. Undisclosed debt prevents citizens and lenders from seeing the full repayment burden. When the obligations appear, markets reassess both the amount owed and the credibility of government accounts.
Managing the schedule
Debt managers can spread maturities across more years, develop local-currency markets and avoid concentrating redemptions in a single period. Governments can publish guarantees and the liabilities of state-owned enterprises alongside their direct debt. Fiscal plans can protect investments with high expected returns. Where repayment is already unsustainable, an earlier restructuring may do less damage than repeated short extensions.
Borrowing allows states to absorb shocks and finance assets that last for decades. Its cost depends on the terms and the date on which they reset. Each bond that matures in 2026 brings today’s price of money into the next budget. The calendar shows how often governments will have to make that adjustment and how much room remains for everything else.