The global bond markets are closing in on a historic $100 trillion milestone, highlighting just how heavily governments around the world are relying on debt to fund spending, infrastructure and budget deficits. The surge in borrowing is coming as governments prepare to issue nearly $30 trillion in new debt annually, putting increasing pressure on the pool of available investment capital.
The United States remains the biggest player, with $35.4 trillion in government bonds outstanding as of August 26, according to Bloomberg data. China follows with $19.1 trillion, while Japan has $17.8 trillion. The United Kingdom, France, Italy, Germany, India, Canada and Brazil make up the rest of the world’s 10 largest government bond markets, bringing the combined value closer to the $100 trillion mark.
For Nigeria, the global borrowing trend mirrors developments at home. The Debt Management Office (DMO) has raised N7.62 trillion through Federal Government of Nigeria bonds in eight primary market auctions between January and August 2026. The funds have helped finance the Federal Government’s budget deficit, estimated at about N31.5 trillion, although auction data shows that investor appetite for bonds has been tighter compared with Treasury bills.
Higher short-term Treasury bill rates are also shaping Nigeria’s debt market, contributing to an inverted yield curve where short-term instruments offer higher returns than longer-term bonds. While this can attract investors seeking immediate returns, it also underscores the challenge of meeting near-term financing needs without putting additional pressure on the government’s long-term debt position.
The DMO has meanwhile clarified figures surrounding Nigeria’s dollar-denominated FGN bond, correcting reports that N611.71 billion was spent on debt service for the bond in March 2025. The agency said the correct figure for the first quarter of 2025 was N67.988 billion, while N611.71 billion represented total debt service on all outstanding FGN bonds, excluding the dollar bond. Nigeria has also secured a $5 billion Total Return Swap facility with First Abu Dhabi Bank, aimed at providing dollar liquidity for budget implementation, infrastructure, debt refinancing and other urgent funding needs. As governments continue to borrow heavily, the key question for markets is whether strong investor demand can keep pace with rising issuance—or whether higher borrowing costs and pressure on long-term debt sustainability will become the next big challenge.
