long-term borrowing of sovereign nations will reach $12.3 trillion in 2025, continuing the steady increase of recent years.

This will be fueled by high fiscal deficits and spending pressures, including on defense.

According to S&P Global, the research arm of S&P Ratings, the U.S. will account for 40% of global long-term issuance, raising its 2025 borrowing by $200 billion to a total of $4.9 trillion, with its fiscal policy likely to remain expansionary.

China would remain the second-largest sovereign issuer, with the equivalent of $2.1 trillion, posting the largest nominal increase amid efforts to stimulate the economy.

It said other major sovereign issuers, primarily G-7 countries, will keep their borrowing broadly flat and high, with ongoing discussions about how to (debt-)finance Europe's pressing defense spending needs.

Sovereigns' interest bills will also likely remain elevated as rates could stay higher than previously expected.

“For 2025, we expect a 3% year-on-year surge in sovereign commercial borrowing. This continues a steady increase since 2022. With lingering inflationary pressures and uncertainty about global trade policy, interest rates might not come down that much, implying still-high funding costs for large developed market issuer”, it stressed.

Meanwhile, borrowing will remain flat in the rest of the world.