This is the first edition of the annual Global Debt Report, which examines sovereign and corporate bond markets, providing insights into current market conditions and associated policy considerations. It consolidates the Sovereign Borrowing Outlook, previously a standalone OECD publication, with chapters on corporate bond markets and sustainable bonds. The report draws from original OECD survey data provided by national authorities as well as OECD analysis of both commercial and public data sources.

Sovereign and corporate bond markets are at the centre of the global financial system. At a combined value of almost USD 100 trillion, they are similar in size to global GDP. Following decades of expansion, a rapidly changing macrofinancial landscape is now presenting the most significant test to these markets in a generation.

Bond financing has grown alongside expansionary monetary policies, in particular quantitative easing, since the 2008 global financial crisis. This trend is broad-based, from sovereign issuers responding to increased public spending needs in both advanced and emerging economies, to financial and non-financial corporations across the world. A favourable funding environment post-2008 has opened bond markets to a wider range of issuers, including lower-rated governments and companies, expanding into riskier market segments. It has also contributed to the emergence of the sustainable bond market. The total volume of sovereign and corporate bond debt globally at the end of 2023 was almost USD 100 trillion, similar in size to global GDP.

Gross borrowing in the OECD area increased in 2023, having fallen in the previous two years, and is projected to reach a record high in 2024, surpassing the previous peak during the height of the COVID-19 pandemic. This has pushed outstanding sovereign debt to unprecedented levels, yet debt-to-GDP ratios have remained relatively stable, as borrowing increases have been largely offset by the impact of inflation on nominal GDP.Despite the cost of borrowing increasing for the third consecutive year, the public finances of OECD countries are partially insulated from higher rates because of the lengthening of maturity profiles since 2008. At the same time, as central banks begin reducing their holdings of sovereign bonds, the net supply for the market to absorb has reached record levels.

Corporate indebtedness has increased significantly in the last fifteen years. Globally, there were USD 34 trillion of corporate bonds outstanding at the end of 2023, an increase in real terms of USD 13 trillion since 2008. Alongside accommodative monetary policies, companies have been able to increase their borrowing and lock in favourable terms. In parallel, the characteristics of corporate bond markets have changed in at least four respects: sectoral composition, geographic composition, investor universe and credit quality. The funding environment that enabled the vast expansion in borrowing has now come to an end, and refinancing needs are substantial. The investment grade segment is increasingly concentrated in lower-rated bonds, and identically rated bonds have very different characteristics today than they did fifteen years ago. The non-financial sector in particular is more leveraged than at any other point in recent history.In this context, this chapter explores the implications of this new macrofinancial landscape on corporate bond markets globally.

At the end of 2023, the outstanding amount of sustainable bonds issued by the corporate and official sectors totaled USD 2.3 trillion and USD 2.0 trillion, respectively. Green bonds dominate issuance in both sectors. The key difference between the sectors is that sustainability‑linked bonds (SLBs) played a lesser role in the official sector, with only USD 9 billion issued in 2023. Additionally, sustainable bonds constituted a modest portion of funding for central governments, representing merely 0.4% of all sovereign bond issuances in 2023.There is no statistically significant evidence that companies systematically benefit from a premium for issuing a sustainable bond. This is a sign that market practices and regulations may need to change for sustainable bonds to fulfil their potential. For example, sustainable bond contracts typically allow issuers to refinance existing projects with the proceeds, rather than invest in new projects. At the same time, the share of sustainable bonds being assured by second party opinion providers has grown from less than half in 2019 to nearly three-quarters in 2023.