Investment Rating - The report does not explicitly provide an investment rating for the industry analyzed Core Insights - The report introduces a novel framework called "Debt-at-Risk" to analyze risks surrounding public debt, indicating that global public debt could be approximately 20 percentage points higher than currently projected in severely adverse scenarios [6][12][26] - The framework employs a quantile panel regression to assess how macro-financial and political conditions impact future debt outcomes, highlighting pronounced variations in risks, especially in the upper tail of the distribution [6][12][16] - The analysis indicates that debt-at-risk is a key variable for predicting fiscal crises, outperforming other economic variables as a leading indicator [29][35] Summary by Sections Introduction - Global public debt exceeded $100 trillion in 2024 and is projected to approach 100% of global GDP by 2030, driven by major economies like China and the United States [15] - Rising trade tensions, tighter financial conditions, and spending pressures could exacerbate fiscal deficits and complicate the debt outlook [15][16] Methodology - The "debt-at-risk" framework builds on the "growth-at-risk" methodology and examines the dynamics of global debt distribution over a projection horizon of one to five years [17][18] - The empirical approach uses a location-scale model to estimate the predictive distribution of debt-to-GDP ratios, incorporating various financial, political, and economic variables [18][20] Results - Global debt-at-risk for 2027 is estimated at 117% of GDP, about 20 percentage points higher than previous projections [26] - For advanced economies, the three-year-ahead debt-at-risk in 2024 is estimated at about 131% of GDP, while for emerging markets, it is about 96% of GDP [27] - The report finds that adverse financial developments, such as tighter financial conditions and higher sovereign spreads, disproportionately affect the right tail of the future debt distribution [22][24] Extensions - The report evaluates the usefulness of debt-at-risk in predicting fiscal crises, finding it to be a robust predictor [29] - It expands the sample to include approximately 175 economies, quantifying upside risks to the debt outlook for nearly every economy [30] - The analysis identifies cross-country heterogeneity in debt-at-risk, influenced by initial debt levels and income status [31]