US debt crisis is going to bring corporate bonds onchain as corporates seek out cheaper financing from passive usd holders. Generally speaking this is going to eat hard into stablecoin demand. Why hold 0% yielding stables while usd is hyperinflating when you can at least own apple debt yielding 6%.

The global debt crisis has never been worse. Japan now has a gross government Debt-to-GDP ratio of 204.4%, the highest among any major world economy. Italy follows at 138.4%, while the United States stands at 125.8%, which is only below the ~132.0% record set during the 2020 pandemic. At the same time, France’s gross government Debt-to-GDP ratio is 118.4%, while Canada’s, China’s, and the UK’s are 110.7%, 106.9%, and 103.6%, respectively. By comparison, Germany is the only major economy below 100.0%, at 64.6%. The current average among advanced economies is 108.2%. The world economy is drowning in debt.

🚨 SOFTBANK'S DEBT CRISIS IS GROWING. It is now down -25% in just the last 7 trading sessions. The biggest concern is its exposure to AI. As of June 2026, it held $164 Billion in debt, much of it used to finance its AI investments. The interest costs for this is already at $2 Billion, up 95% from Q1. In September, it raised another $11 Billion at interest rates as high as 9.75%, adding $1 Billion in annual interest. Investors are now panicking over whether these massive costs will ever translate into actual profits. SoftBank’s 5-year default insurance (CDS) shot up by 24 basis points to 424 bps. This makes it a similar story to what happened to Oracle’s 5Y CDS (288 bps) and CoreWeave’s CDS (1,100bps). Higher US inflation and Fed rate hike fears are adding even more pressure. Any corrections in AI valuations could hurt its investments and make it difficult to repay such large debt.

The global debt crisis is set to get even worse: The US fiscal deficit is projected to widen to -6.1% of GDP in 2027, its largest since 2012, excluding the pandemic years of 2020 and 2021. This will be the biggest deficit as a % of GDP among the 5 major developed economies, including the UK, Germany, France, and Japan. Furthermore, Germany's deficit is expected to widen from -2.7% of GDP in 2025 to -4.1% in 2027, its largest since 2010, excluding the 2020 pandemic. Japan's fiscal deficit is estimated to more than triple, from -0.7% to -2.5% of GDP, its largest since 2022. The UK is the only economy expected to improve its fiscal position, with its deficit narrowing from -4.3% in 2025, to -3.1% of GDP next year, while France's budget gap is projected to widen to -5.2%. Deficit spending is only accelerating.

🇫🇷 FRENCH DEBT CRISIS COULD POSE GREATER RISKS THAN GREECE, COMMERZBANK WARNS Commerzbank warns that France's debt problems could pose greater systemic risks to the eurozone than Greece's sovereign debt crisis. Eurozone public debt now averages 90% of GDP, up from 80% in 2009, while appetite for fiscal reform has weakened. However, stronger banks, French institutions and ECB intervention tools reduce the risk of contagion. Commerzbank does not expect a new sovereign debt crisis, but warns the risks are rising.

BREAKING: Global debt jumped by more than +$10 trillion in H1 2026, to a record $365 trillion. Emerging-market debt drove the increase, rising +$6.5 trillion, to a record $110 trillion, with most of the surge coming from governments and non-financial companies. Excluding China, emerging-market and developing-economy debt soared to a record $38 trillion. Global debt now stands at ~310% of global GDP, although the ratio has fallen -25 percentage points from its early-2021 peak, largely because inflation has boosted nominal GDP rather than because of deleveraging. Meanwhile, developed economies paid more than $3.3 trillion in interest on marketable government debt over the last year, exceeding estimated global spending on AI at $2.6 trillion, defense at $3.1 trillion, and clean energy at $2.3 trillion. This comes as annual government interest payments across the G7 alone surged +85% YoY. The global debt crisis is in uncharted territory.