Nearly $10T of US govt debt matures in 2025 with 2.50% avg coupon. Refinancing at > %5 will make the debt interest payments huge and consume most of the budget.

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| Year | Debt Maturing (in Trillions) | Average Coupon Rate (%) | Estimated Refinancing Rate (%) | Interest Payments (in Trillions) |
|———–|——————————|————————–|——————————-|———————————-|
| 2023 | $0.8 | 2.50 | 5.00 | $0.04 |
| 2024 | $1.2 | 2.50 | 5.00 | $0.06 |
| 2025 | $10.0 | 2.50 | 5.00 | $0.50 |
| 2026 | $1.5 | 2.50 | 5.00 | $0.075 |
| 2027 | $1.0 | 2.50 | 5.00 | $0.05 |

The United States is staring down a massive financial crisis, with $10 trillion in government debt set to mature in 2025. This debt, with an average coupon rate of just 2.50%, is poised for a massive refinancing at a time when interest rates are above 5%. The result? A staggering increase in interest payments that could devour a significant portion of the federal budget.

The current economic climate, dominated by high interest rates due to the Federal Reserve’s battle against inflation, is creating a perfect storm. With U.S. Treasury securities now carrying an average interest rate exceeding 5%, refinancing this $10 trillion debt will come at a steep cost. Interest payments are set to skyrocket, potentially more than doubling from where they stand today. This shift in borrowing costs threatens to overwhelm the federal budget, leaving policymakers with tough choices ahead.

Sources:

https://home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics

https://markets.businessinsider.com/news/bonds/us-debt-maturing-bond-yields-treasury-bills-federal-reserve-qt-2023-9

https://www.whitehouse.gov/wp-content/uploads/2024/03/ap_21_borrowing_fy2025.pdf