According to S&P Global Ratings, gross commercial borrowing in the Americas will amount to an equivalent of US$5.66 trillion in 2025, up almost 2% from 2024. This increase is due to significantly higher borrowing in the U.S., which outweighs a projected decline in debt issuance in Latin America. In general, we estimate the total commercial borrowing by sovereigns in the Latin American region to be slightly lower as a share of regional GDP in 2025, compared with 2024, but stable for the U.S. and Canada. The Americas includes the U.S., Canada, and 29 Latin American and Caribbean sovereigns that we rate.

In the U.S. and Canada, gross commercial borrowing is expected to reach US$5 trillion in 2025, reflecting a 3.5% increase from 2024--a notable slowdown compared with the 32% growth from 2023 to 2024. This rise is primarily driven by increased borrowing in the U.S. We expect Canada to borrow US$35 billion less than in 2024 but for U.S. issuances to be approximately US$200 billion higher than in 2024. We expect the U.S. to account for about 86% of gross debt issuance across the Americas, consistent with previous years.

In Latin America and the Caribbean, borrowing needs are declining. We project gross commercial borrowing for the 29 sovereigns we rate in the region to reach US$643 billion in 2025, an 8% decrease from 2024. This slowdown is primarily driven by Mexico, which we expect to borrow US$43 billion less than last year, and Brazil, with a reduction of US$9 billion in borrowings compared with 2024.

Despite lower overall borrowings, we project Brazil, Mexico, Argentina, Colombia, and Chile to be the top 5 Latin American issuers in 2025. Brazil alone will borrow more than the all rated sovereigns combined (excluding Mexico), as it accounts for 44% of the total commercial long-term borrowing of Latin America. After Brazil, the largest borrower in Latin America is Mexico, with an estimated commercial borrowing of 26% of all commercial issuances this year, followed by Argentina (16%) and Colombia (3.6%) (see chart 1).

Chart 1

Chart 2

We project that during 2025, the share of issued commercial sovereign debt rated 'BBB-' or higher (investment-grade) in Latin America will be around 31% of total commercial debt, similar to 32% in 2024. The rating category in which borrowing will be most concentrated this year is 'BB' with 53% of total commercial borrowing, in line with historical data.

Chart 3

Much of the general increase in commercial borrowing in the U.S. and Canada will be allocated to refinancing maturing debt. Around 63% (or US$3.1 trillion) of gross long-term commercial borrowing by these two sovereigns will be used to refinance maturing long-term commercial debt, resulting in estimated net long-term commercial borrowing of US$1.8 trillion. In Latin America, about 75% (or US$483 billion) of the sovereigns' gross long-term commercial borrowing will be used to refinance maturing long-term commercial debt, resulting in estimated net long-term commercial borrowing of US$160 billion (see tables 1-2).

In 2025, we project Latin America's amortization of maturing long-term debt to be equivalent to 7.2% of the region's GDP, down from a peak of 8.9% in 2023. However, this ratio remains 4 percentage points higher than the pre-pandemic average (2017-2019), reflecting increased net borrowing during the pandemic and ongoing fiscal pressures following the economic recovery. In contrast, we expect the amortization of maturing long-term debt in the U.S. and Canada to be around 10% of GDP, similar to the 11% recorded last year. This is unfavorable compared with the approximately 9% of GDP in the pre-pandemic years.

In line with projected borrowing, we expect the total commercial debt stock in Latin America to reach 50% of regional GDP in 2025, up from 46% in 2024. This indicates that the region's debt stock will peak this year, surpassing the 49.3% of GDP in 2020 during the pandemic.

Foreign-currency-denominated debt in Latin America and the Caribbean is higher than other regions, but some sovereigns (including the two largest borrowers) stand out for their developed domestic markets. Brazil and Mexico are notable examples of countries that have contained exchange rate risk by borrowing mostly in local currency in the domestic market. Local currency debt accounts for 95% of Brazil's commercial debt and for 84% in Mexico. All debt issued by the U.S. and nearly all issued by Canada is in local currency.

Short-term commercial debt peaked in 2020, but it has consistently fallen in the Americas as a whole. We project the stock of short-term debt as a share of GDP at 2% and 19%, respectively, for Latin America and for the U.S. and Canada in 2025.

According to our calculations, Canada and the U.S. face high debt rollover ratios (including short-term debt), at 14% and 30% of their GDP, respectively. However, deep capital markets and ample monetary flexibility mitigate the credit risk embedded in the tenor of their debt. The high ratio came as consequence of a very sharp increase of short-term borrowing during the pandemic.

According to our calculations, The Bahamas will face the highest debt rollover ratio of the Latin American and Caribbean region, at 21.8% of its GDP. Argentina, Suriname, Brazil, Colombia, and Aruba will face some of the highest debt rollover ratios (including short-term debt) of rated Latin American and Caribbean sovereigns, at 16.7%, 12.9%, 12.3%, 10.1%, and 8.9% of their GDP, respectively. The high rollover ratios, both in terms of total debt stock and GDP, in these low-rated sovereigns are a vulnerability, especially if faced with adverse refinancing conditions. The rollover ratios of sovereigns with higher proportions of official debt tend to be lower because official debt typically has longer maturities than commercial debt.

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Chart 5

Canada and the U.S. are likely to account for about 89% of commercial debt issuance in the Americas in 2025 (and the U.S. alone for 86%). We project that the net sovereign debt burden for 2025 will remain stable as a share of GDP since 2023 in Canada but rise by nearly 4 percentage points in the U.S. We expect that the net commercial debt burden in Canada will stabilize over the next couple of years but may rise moderately in the U.S. because of high fiscal deficits largely reflecting rising social spending on health and pensions. However, the wealth, resilience, economic diversity, deep financial markets, and institutional strengths of the two countries should enable them to manage their higher debt burden without jeopardizing the sovereign credit ratings.

In contrast, we expect that commercial debt issuance in Latin America and the Caribbean will decline by nearly 8% in 2025 in dollar terms (or 1 percentage point of GDP), led by a fall in Mexico (nearly 20%), Brazil, and Peru. Total commercial borrowing in the region is likely to be 9.5% of GDP, down from nearly 12% in 2021. In contrast, total commercial debt issuance in Canada and the U.S. in 2025 is likely to remain stable at 15% of their combined GDP.

We expect GDP growth in Latin America to average around 2% in 2025, a modest pace of expansion. Sovereigns in the region continue to access global capital markets despite recent uncertainty about tariffs and trade barriers. However, Latin America's growth rate is, on average, below the growth rate in other emerging markets, especially in Asia. Slow growth will make it difficult, absent fiscal reforms, to run moderate fiscal deficits and thereby contain the burden of sovereign debt.

Net general government debt (including noncommercial debt) has increased steadily in most of Latin America, more than doubling as a share of GDP in countries like Chile and Peru during 2019-2025. The debt burden has also risen considerably in large countries like Brazil and Mexico, as well as Colombia and Panama. The combination of a higher stock of debt and recently high global interest rates has worsened the interest burden of most sovereigns. Interest payments have doubled as a share of general government revenues in Panama during 2019-2025 and have risen materially in Mexico, Brazil, and Peru.

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Chart 7

Our sovereign ratings reflect the growing debt burden in many countries and vulnerabilities that arise from the composition of the debt. Some sovereigns (typically investment-grade) have limited the vulnerability embedded in their debt by mitigating exchange-rate and interest-rate risk. Sovereigns with a high share of foreign-currency-denominated debt are more vulnerable to adverse movements in the exchange rate that could substantially boost their debt servicing bill. Similarly, sovereigns with greater reliance on short-term and floating-rate debt are more vulnerable to sharp spikes in interest rates. Sovereigns that have successfully developed their local capital markets, often through pension reform, enjoy more access to stable long-term domestic funding, reducing their vulnerability to a loss of external funding.

The growth of domestic pension funds in many Latin American sovereigns over recent decades has helped contain the vulnerabilities of a growing debt burden. However, many people now consider that pension reform was not as beneficial as first envisaged. Due to low or volatile economic growth and to the large size of the informal sector, many people lack access to any pension or are entitled to very low pension payments because of low contributions over their working life. Hence, governments in Chile, Peru, Colombia, and Mexico have reformed their pension systems in recent years, seeking to broaden coverage and raise benefits. The short- and long-term impact of such reform on fiscal policy and domestic capital market development may affect sovereign creditworthiness.

Debt denominated in foreign currency typically accounts for a limited share of total debt in investment-grade sovereigns, thanks to the development of local capital markets that provide alternative sources of funding when external financing falls. Foreign currency debt was below 37% of total sovereign debt in Chile in 2024, 16.5% in Mexico, 35% in Colombia, and just under 49% in Peru in 2024, mitigating the risk embedded in their debt burden (see table 4). However, we project seven sovereigns in the Americas to have over 50% of their total debt denominated in foreign currency. In addition, four have exclusively foreign currency debt: Ecuador, El Salvador, Nicaragua, and Panama.

Sovereigns that have issued a high share of their liabilities through long-term fixed-rate debt are less vulnerable to sudden spikes in interest rates. Such debt accounts for 100% of sovereign debt in Bermuda, Montserrat, and Curacao. Long-term fixed-rate debt accounts for over 80% of total debt in Aruba, Barbados, Belize, Dominican Republic, Guatemala, Panama, and Peru. In contrast, such debt accounts for less than half of total debt in The Bahamas, Mexico, Suriname, Brazil, and Uruguay.

Our estimates focus on debt issued by a central government in its own name and exclude local government and social security debt, as well as debt issued by other public bodies and government-guaranteed obligations. In terms of commercial debt instruments, our estimates for long-term borrowing include bonds (with maturities of more than one year) issued either on publicly listed markets or sold as private placements, as well as commercial bank loans.

In addition to commercial debt, some of the estimates we use in this study include official debt. We do not include government debt that central banks may issue for monetary policy purposes in some countries. All reported forecast figures are our own estimates and do not necessarily reflect the issuers' projections. Our estimates are informed by our expectations regarding central government deficits, our assessment of governments' potential extra-budgetary funding needs, and our estimates of debt maturities in 2025. Estimates that we express in dollars are subject to exchange-rate variations.

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