The weight of the water compresses a balloon on earth.
In space, since everything is falling together, the balloon wouldn't compress, it would expand because the atmosphere and water isn't compressing it. The surface tension of the water would allow it to envelop the balloon, so long as there is enough water to allow it to do so, otherwise it would want to gather into a spheroid because there aren't enough large surface defects on a balloon to "hold" the water. If the surface of the balloon was covered in sand glued to it, just enough water would film across the surface of the balloon.
Water gathering on a rough surface means you could drown in space if you had a drinking tube leak into your helmet and you couldn't drink the water fast enough to breathe.