Global Debt Hits a Staggering $353 Trillion Record: IIF Reports Strategic Shift Away from U.S. Treasuries Amid Fiscal Concerns

The Institute of International Finance (IIF) released its quarterly "Global Debt Monitor" report on Wednesday, revealing that global debt levels soared to an unprecedented record of $353 trillion by the end of March. The report highlights a critical pivot in investor sentiment: for the first time in years, there are clear indications of major investors diversifying their portfolios away from U.S. Treasuries. This shift is driven by a stark contrast between the stabilizing demand for U.S. debt and the surging international appetite for Japanese and European government bonds.

Diverging Fiscal Paths and the AI Boom Emre Tiftik, Director of Global Sustainability Research at the IIF, noted that these trends are partially fueled by the "divergence in debt trajectories." While the U.S. Congressional Budget Office (CBO) forecasts a deteriorating long-term fiscal outlook with a rising debt-to-GDP ratio, the Eurozone and Japan are expected to maintain more moderate fiscal paths. Interestingly, the U.S. corporate bond market remains resilient, largely supported by robust issuance related to the Artificial Intelligence (AI) sector and strong outward capital flows.

Growth Drivers: U.S. Borrowing and Chinese SOEs Global debt increased by over $4.4 trillion in the first quarter alone—the fastest quarterly rise since mid-2025. Tiftik emphasized that U.S. government borrowing remains the primary engine of this growth. Simultaneously, the report identified a sharp acceleration in debt among Chinese non-financial corporate borrowers, particularly state-owned enterprises (SOEs). Beyond the two largest economies, emerging markets (excluding China) hit a new record debt of $36.8 trillion, while mature markets saw a slight decrease, underscoring an increasingly fragmented global financial landscape.