Because global pile of debt growth has been outpacing global economic growth for quite some time now, the sovereign debt bubble is getting wobblier by the day.
As Fitch Ratings noted yesterday: "The number of Fitch-rated sovereigns with 'AAA' ratings is at its lowest level since 2003 and is expected to remain unchanged over the next two years". In other words, non-junk is getting smaller and smaller, even as Central Banks continue to hold more of the prime stuff.
Currently, only eleven countries have 'AAA' status with Fitch, compared with an all-time high of 16 during 2004 to 2009, "reflecting the longer term impact of the global financial crisis." Personally, I don't think this reflects the impact of the GFC alone. Instead, it reflects the fact that majority of Governments around the world have gone on a debt-piling binge post-GFC in the absence of real productivity and economic growth.
All in, less than 10 percent of the global sovereign debt issuers are now rated AAA. And only 40 percent of global sovereign debt volumes fall under AAA rating (much of this sitting in the Central Banks' vaults), "down from 48% a decade ago".
Source: Fitch Ratings