Global Sovereign Debt Report 2014: Borrowing To Increase By 2.7% To $7.

1 Trillion
Primary Credit Analyst: Moritz Kraemer, Frankfurt (49) 69-33-999-249; moritz.kraemer@standardandpoors.com Secondary Contacts: Liliana Negrila, Frankfurt +49 69 33 999-248; liliana.negrila@standardandpoors.com Alexander Petrov, London (207)1767115; alexander.petrov@standardandpoors.com

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Standard & Poor's Ratings Services projects that the 127 rated sovereigns globally will borrow an equivalent of $7.1 trillion from long-term commercial sources in 2014 (for a full list and respective ratings see "Sovereign Ratings And Country T&C Assessments," published Feb. 21, 2014, on RatingsDirect). This would be a 2.7% increase in long-term commercial debt issuance compared with 2013. Approximately 61%, or $4.4 trillion of the sovereigns' gross borrowing will be to refinance maturing long-term debt, resulting in an estimated net borrowing requirement of $2.8 trillion (see table 1). Consequently, we project that commercial debt by rated sovereigns will reach an equivalent of $44.7 trillion by the end of 2014, and that the total commercial and official bilateral and multilateral debt stock will reach $46.0 trillion, a year-on-year increase of 6.1%. We expect that outstanding short-term commercial debt will end 2014 largely unchanged at $5.3 trillion. (Watch the related CreditMatters TV segment titled "Key Takeaways From S&Ps Global Sovereign Debt Report: Global Sovereign Issuance To Surpass $7 Trillion In 2014," dated Feb. 27, 2014). Overview We forecast a $185 billion (2.7%) increase in commercial borrowing by the 127 sovereigns currently rated by Standard & Poor's, to reach $7.1 trillion in 2014. The U.S. and Japan will again be the most prolific borrowers this year, accounting for 57% of the total, followed by Italy, China, and Brazil. Absolute debt levels continue to increase. We project that total outstanding global sovereign commercial debt will rise during 2014 by $2.6 trillion to reach $45 trillion by the end of this year.

We project that during 2014 the share of commercial sovereign debt rated 'AAA' (foreign currency rating) will remain around 14% of total commercial debt stock and 10% of total long-term commercial borrowing. The lion's share of commercial debt stock and borrowing will be concentrated in the 'AA' category with 64% and 67%, respectively, because the top two sovereign debtors (U.S. and Japan) fall into this group. At the same time, the share of debt and borrowing by sovereign issuers rated in the 'BB' category or below (so-called "noninvestment grade") accounts for less than 5% of the global total (see table 2 and chart 2). According to our calculations, Japan will face by far the highest debt rollover ratio (including short-term debt), reaching 65% of GDP. Egypt and Jordan follow, with rollover ratios of 40% and 33%, respectively, owing to their dependence on short-term funding in the domestic market (see table 2). The debt-rollover ratios for infrequent issuers with small but lumpy debt obligations can be very low if little or no debt matures in a given year and if they do not have a significant amount of short-term debt. The rollover ratios of sovereigns with a higher proportion of official debt tend to be lower, because official debt typically has longer maturities than commercial debt.

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The U.S. and Japan are by far the largest sovereign issuers, accounting for 31.6% and 25.6% of global sovereign borrowing in 2014, followed by Italy in a distant third place, with 4.7%. China and Brazil are the most prolific emerging market sovereign borrowers, with just under 4% each of the global total (see chart 1 and table 2). The G7 nations account for almost three-quarters of global borrowing and debt. Although four eurozone sovereigns (Italy, France, Germany, and Spain) are among the top 10 borrowers, we expect that eurozone member sovereigns together will issue only a little more than half of what the U.S. is likely to issue. In a breakdown by region, Asia-Pacific sovereigns are expected to borrow $2.5 trillion, 36% of the total, (driven by Japan and, to a lesser extent China), followed by North America (33%) and Europe (24%). In contrast, borrowing by sovereigns in Africa and the Middle East is negligible by global comparison (see chart 3 and table 2). Approximately 30 sovereigns engage in inflation-indexed forms of borrowing. These instruments enjoy a higher popularity among nations that have experienced bouts of high or hyper- inflation, especially Latin America, even if those episodes lie decades in the past. The sovereign with the highest share of indexed bonds is Chile (66%), followed by Uruguay (47%) and Brazil (35%). Among advanced economies, the U.K. has the highest share of inflation-indexed bonds (see chart 4), partly satisfying a demand from its large pension sector attempting to hedge long-term liabilities. Estimates in this report do not account for sovereigns not rated by Standard & Poor's. Since few sizable sovereigns remain unrated, however, we consider the data presented here to be robust in reflecting global developments in sovereign debt and borrowing. 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 may be issued by central banks 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 extrabudgetary funding needs, and our estimates of debt maturities in 2014. Estimates that we express in dollars are subject to exchange rate variations. This global report summarizes a series of simultaneously released regional sovereign borrowing and debt reports, which we list in the "Related Research" section below. Reports with some additional detail have been produced for Asia-Pacific, Europe, Latin America, Sub-Saharan Africa, the Commonwealth of Independent States, and the Middle East and North Africa. A special report was furthermore issued on emerging market sovereign borrowing and debt.
Table 1

Sovereign Commercial Issuance And Debt

(Bil. $) Gross long-term commercial borrowing Of which amortization of maturing long-term debt Of which net long-term commercial borrowing 2013e 6,955 2014f 7,140 4,369 2,771

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Table 1

Sovereign Commercial Issuance And Debt (cont.)

Total commercial debt stock (year-end) Of which short-term debt Of which debt with original maturity greater than one year (% GDP) Gross long-term commercial borrowing (% GDP) Of which amortization of maturing long-term debt (% GDP) Of which net long-term commercial borrowing (% GDP) Total commecial debt stock (year end) (% GDP) Of which short-term debt (% GDP) Of which debt with original maturity greater than one year (% GDP) e--Estimate. f--Forecast. 57.8 7.3 50.5 9.5 9.4 5.7 3.6 58.8 7.0 51.7 42,137 5,339 36,798 44,707 5,340 39,368

Chart 1

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Chart 2

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Chart 3

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Chart 4

Table 2

Global Sovereign Debt Structures And Rollover Ratios

--Gross commercial long-term borrowing (bil. $)-2014 (% of 2014f total) 0.0 1.1 0.0 12.3 18.0 0.2 74.5 29.1 0.3 0.4 0.00 0.02 0.00 0.17 0.25 0.00 1.04 0.41 0.00 0.01 --Total commercial debt at year-end (incl. short-term, bil. $)-2014 (% of total) 0.01 0.01 0.00 0.07 0.20 0.00 0.72 0.58 0.00 0.01 Foreign Long-term Bi-/ Short-term currency fixed-rate Multilateral Rollover debt (% of debt (% debt (% of Inflation-indexed debt (% of ratio (% total) of total) total debt) debt (% of total) total) of GDP)

2013e Abu Dhabi Albania Andorra Angola Argentina Aruba Australia Austria Azerbaijan Bahamas 0.0 1.1 0.9 9.8 22.8 0.3 57.5 30.8 0.1 0.2

2013e 5.9 5.1 1.1 27.1 110.7 1.8 275.3 252.3 0.8 4.7

2014f 5.1 5.9 1.1 32.1 90.7 2.0 322.4 257.2 1.0 5.1

2013 0 30 20 10 0 2 3 2 5 18

2013 95 41 0 60 80 47 0 0 84 26

2013 44 42 17 57 50 94 90 96 75 19

2013 0 0 0 33 30 0 7 0 0 0

2013 0 35 0 23 12 3 0 0 84 6

2014 1 24 7 6 3 5 2 8 1 11

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Table 2

Global Sovereign Debt Structures And Rollover Ratios (cont.)

Bahrain Bangladesh Barbados Belarus Belgium Belize Bermuda Bolivia Bosnia and Herzegovina Botswana Brazil Bulgaria Burkina Faso Cameroon Canada Cape Verde Chile China Colombia Congo Brazzaville Cook Islands Costa Rica Croatia Curacao Cyprus Czech Republic DR Congo Denmark Dominican Republic Ecuador Egypt El Salvador Estonia Fiji Finland France Gabon Georgia Germany 2.8 3.1 0.2 2.8 62.0 0.0 0.8 0.9 0.0 0.0 280.8 1.2 0.0 0.3 96.2 0.0 5.1 254.6 19.9 0.8 0.0 3.4 6.9 0.0 3.9 15.4 0.3 15.2 3.0 0.5 13.4 2.1 0.0 0.1 18.0 221.1 0.5 0.1 243.0 3.4 4.2 0.1 1.5 46.9 0.0 0.0 0.4 0.0 0.0 272.9 2.7 0.0 1.0 91.0 0.1 6.0 278.3 19.3 0.3 0.0 4.2 6.3 0.0 2.6 13.7 0.0 14.8 2.6 1.2 17.3 2.6 0.0 0.0 17.0 226.6 0.5 0.3 228.9 0.05 0.06 0.00 0.02 0.66 0.00 0.00 0.01 0.00 0.00 3.82 0.04 0.00 0.01 1.27 0.00 0.08 3.90 0.27 0.00 0.00 0.06 0.09 0.00 0.04 0.19 0.00 0.21 0.04 0.02 0.24 0.04 0.00 0.00 0.24 3.17 0.01 0.00 3.21 13.9 22.2 3.7 5.6 492.6 0.7 2.3 6.2 0.0 0.8 918.9 6.8 0.0 1.7 668.0 0.9 33.0 1,376.8 124.4 2.4 0.0 16.8 36.6 0.0 10.4 88.9 2.7 158.7 12.5 11.1 227.0 6.6 0.0 1.8 116.7 1,894.4 2.5 1.3 1,483.0 16.4 23.4 3.8 8.2 507.1 0.6 2.1 5.6 0.1 0.5 975.8 8.9 0.1 2.3 727.0 1.0 37.8 1,595.8 130.1 3.7 0.0 19.0 37.8 0.0 5.7 94.1 3.4 160.0 12.6 9.4 236.7 8.6 0.0 1.9 125.6 1,984.3 2.9 1.8 1,492.2 0.04 0.05 0.01 0.02 1.13 0.00 0.00 0.01 0.00 0.00 2.18 0.02 0.00 0.01 1.63 0.00 0.08 3.57 0.29 0.01 0.00 0.04 0.08 0.00 0.01 0.21 0.01 0.36 0.03 0.02 0.53 0.02 0.00 0.00 0.28 4.44 0.01 0.00 3.34 23 15 28 4 9 20 5 0 0 3 3 2 0 3 27 1 0 3 2 3 0 5 14 0 4 7 0 4 0 0 45 4 0 3 4 12 2 2 5 49 52 35 90 0 82 98 46 100 67 4 55 97 72 1 47 13 1 27 85 92 31 59 0 1 19 78 10 73 100 18 100 0 27 0 0 93 84 0 77 83 60 43 90 22 95 85 51 30 39 85 72 98 64 92 34 97 94 73 100 65 61 100 61 76 95 93 74 78 44 63 0 97 78 76 83 75 90 0 0 0 0 0 0 0 15 0 0 35 0 0 0 7 0 66 0 0 0 0 17 0 0 0 0 1 3 0 0 0 0 0 0 0 12 1 0 5 5 52 11 66 0 44 0 34 100 67 0 27 100 68 0 52 3 0 11 51 100 6 5 100 56 4 55 0 47 51 9 46 100 15 0 0 38 74 0 12 7 30 4 15 16 5 2 3 2 9 2 1 1 9 4 0 1 4 1 0 4 16 0 24 7 1 6 4 3 40 6 0 1 5 13 2 3 7

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Table 2

Global Sovereign Debt Structures And Rollover Ratios (cont.)

Ghana Greece Grenada Guatemala Honduras Hong Kong Hungary Iceland India Indonesia Ireland Israel Italy Jamaica Japan Jersey Jordan Kazakhstan Kenya Korea Kuwait Latvia Lebanon Liechtenstein Lithuania Luxembourg Macedonia Malaysia Malta Mexico Mongolia Montenegro Montserrat Morocco Mozambique Netherlands New Zealand Nigeria Norway Oman Pakistan Panama 4.5 0.0 0.0 0.5 1.6 0.0 17.9 0.8 93.2 10.6 10.3 31.9 332.7 0.0 1806.8 0.0 1.1 5.2 3.1 47.8 0.0 0.0 13.9 0.0 2.2 4.0 0.6 26.2 1.0 57.6 1.7 0.2 0.0 11.6 0.1 67.3 9.1 2.3 10.7 0.0 17.4 1.3 4.8 0.0 0.0 0.8 0.9 0.0 13.4 0.4 100.3 16.5 10.4 24.2 338.0 0.0 1824.5 0.4 6.6 5.4 2.9 100.6 0.0 3.9 13.1 0.0 3.3 1.3 0.1 25.8 0.8 71.2 1.7 0.4 0.0 13.2 0.6 65.0 4.2 14.0 11.6 1.3 19.1 1.0 0.07 0.00 0.00 0.01 0.01 0.00 0.19 0.01 1.41 0.23 0.15 0.34 4.73 0.00 13.7 131.7 0.4 8.0 4.8 1.4 86.5 11.9 797.9 122.1 149.7 195.9 2,239.5 14.4 16.5 114.2 0.4 8.4 4.7 0.2 94.5 11.5 901.6 130.9 143.3 196.8 2,325.7 14.5 0.04 0.26 0.00 0.02 0.01 0.00 0.21 0.03 2.02 0.29 0.32 0.44 5.20 0.03 24.11 0.00 0.04 0.05 0.03 1.03 0.01 0.02 0.14 0.00 0.04 0.02 0.01 0.41 0.02 0.87 0.01 0.00 0.00 0.14 0.01 1.08 0.13 0.13 0.19 0.01 0.25 0.03 20 5 12 0 0 0 14 2 8 20 8 1 8 0 19 N.M. 30 2 15 2 0 7 2 N.M. 3 0 25 1 5 12 5 6 2 16 3 13 6 30 36 0 39 3 54 4 81 59 69 87 41 27 6 61 0 14 0 77 0 N.M. 48 18 42 2 100 27 41 N.M. 80 0 78 3 0 19 77 0 98 23 88 0 0 16 0 27 32 100 41 26 47 67 80 100 55 84 91 77 80 66 72 59 95 N.M. 14 52 51 99 100 71 97 N.M. 96 100 55 99 91 53 95 94 0 76 89 91 81 57 64 98 61 84 0 0 0 0 0 0 3 0 0 0 0 26 12 0 1 N.M. 0 1 0 0 0 0 0 N.M. 0 0 0 0 0 24 0 0 0 0 9 0 12 0 0 0 0 0 39 68 47 40 41 0 13 6 6 25 37 0 0 22 0 N.M. 24 18 38 0 0 49 6 N.M. 12 0 37 1 1 13 46 54 98 17 82 0 0 13 0 0 31 23 14 22 14 1 3 0 20 4 4 4 10 6 21 1 65 0 33 1 11 5 0 12 21 0 4 0 11 4 8 6 5 3 0 16 1 13 2 5 5 1 29 2

25.55 10,254.2 10,777.6 0.01 0.09 0.08 0.04 1.41 0.00 0.05 0.18 0.00 0.05 0.02 0.00 0.36 0.01 1.00 0.02 0.00 0.00 0.18 0.01 0.91 0.06 0.20 0.16 0.02 0.27 0.01 0.0 17.7 23.5 14.0 419.9 5.6 7.7 59.5 0.0 15.1 9.5 2.3 168.2 6.6 336.4 4.4 1.0 0.0 54.5 1.2 465.1 55.8 44.9 75.1 3.0 104.9 12.0 0.4 18.3 24.5 15.1 459.4 5.6 8.8 64.1 0.0 17.2 10.8 2.3 181.1 7.0 391.0 5.8 1.3 0.0 62.5 2.8 483.2 60.1 56.3 85.7 3.5 110.9 12.8

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Table 2

Global Sovereign Debt Structures And Rollover Ratios (cont.)

Papua New Guinea Paraguay Peru Philippines Poland Portugal Qatar Ras Al Khaimah Romania Russia Rwanda Saudi Arabia Senegal Serbia Sharjah Singapore Slovak Republic Slovenia South Africa Spain Sri Lanka Suriname Sweden Switzerland Taiwan Thailand Trinidad and Tobago Turkey Uganda Ukraine United Kingdom 0.0 1.0 1.8 11.2 43.4 19.2 0.0 0.5 11.2 33.0 0.4 0.0 0.5 6.4 0.4 19.5 9.7 8.1 18.4 164.3 6.4 0.0 34.2 7.3 31.3 15.6 2.4 80.0 0.1 15.3 245.7 0.0 0.8 1.3 14.5 36.1 19.1 0.0 0.4 12.4 38.5 0.0 0.0 1.1 4.0 0.5 19.8 7.8 5.3 22.0 170.7 5.8 0.0 22.9 6.5 29.3 13.4 1.9 83.4 0.1 4.8 237.0 0.00 0.01 0.02 0.20 0.51 0.27 0.00 0.01 0.17 0.54 0.00 0.00 0.02 0.06 0.01 0.28 0.11 0.07 0.31 2.39 0.08 0.00 0.32 0.09 0.41 0.19 0.03 1.17 0.00 0.07 3.32 3.6 1.2 31.5 114.3 255.1 199.6 34.9 1.8 51.4 174.7 0.9 20.1 2.7 16.2 1.5 323.8 47.3 29.9 150.2 986.7 39.7 0.0 196.5 99.1 178.2 124.3 9.3 249.1 3.1 48.0 2,349 4.4 1.9 30.7 124.1 276.2 202.1 30.4 1.8 58.2 196.9 1.2 15.9 3.1 18.1 1.7 331.2 48.0 30.9 165.6 1,067.4 42.1 0.0 202.0 96.3 185.2 127.8 9.1 238.5 3.3 49.0 2,501 0.01 0.00 0.07 0.28 0.62 0.45 0.07 0.00 0.13 0.44 0.00 0.04 0.01 0.04 0.00 0.74 0.11 0.07 0.37 2.39 0.09 0.00 0.45 0.22 0.41 0.29 0.02 0.53 0.01 0.11 5.59 28.36 0.04 0.24 0.07 0.01 56 0 8 7 1 12 6 0 4 0 11 0 3 1 0 11 0 3 14 11 12 2 14 14 4 3 8 0 15 1 4 13 0 1 20 17 44 81 42 32 30 12 59 98 53 25 79 0 69 78 26 0 7 0 8 0 66 100 30 0 0 2 16 31 50 57 0 0 46 48 60 56 44 62 73 88 76 63 100 98 89 98 87 100 87 77 7 89 82 94 67 83 91 42 70 86 90 81 69 61 85 83 74 78 48 64 56 68 0 0 0 0 4 0 0 2 0 0 0 0 0 0 0 0 0 0 19 0 0 0 15 0 0 0 0 16 0 0 22 8 47 4 0 0 44 59 19 12 7 35 0 0 25 2 58 0 62 35 0 0 10 2 1 5 21 100 0 0 0 2 8 9 50 18 0 0 10 9 57 44 19 1 3 6 4 22 3 5 7 1 3 1 6 11 1 16 4 10 7 15 13 0 9 3 6 3 10 7 4 4 6 17 1 2 10 6

United States 2,140.0 2,255.0 Uruguay Venezuela Vietnam Zambia 2.6 22.2 5.0 0.3 0.9 16.9 2.9 0.9

31.58 11,869.0 12,677.0 0.01 0.24 0.04 0.01 19.4 92.8 30.9 4.5 19.6 107.7 33.0 5.4

Breakdown by region World 6,955 7,140 100 42,137 44,707 100.00

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Table 2

Global Sovereign Debt Structures And Rollover Ratios (cont.)

G7 Euro Area Asia-Pacific Europe (incl. CIS) Latin America Middle-East Northern Africa North America Sub-Saharan Africa 5,086 1,195 2,417 1,785 431 44 5,201 1,173 2,535 1,719 424 56 72.84 16.43 35.51 24.07 5.93 0.78 31,030 8,523 14,420 12,679 1,783 445 32,758 8,814 15,419 13,203 1,904 462 73.27 19.71 34.49 29.53 4.26 1.03

2,236 41

2,346 61

32.86 0.85

12,537 273

13,404 315

29.98 0.71

Breakdown by foreign currency rating category AAA AA A BBB BB B CCC 751 4,644 172 1,068 185 97 38 725 4,779 204 1,108 207 94 23 10.16 66.93 2.85 15.52 2.90 1.32 0.32 5,756 27,029 1,134 6,327 959 773 159 6,054 28,719 1,210 6,777 1,005 802 140 13.54 64.24 2.71 15.16 2.25 1.79 0.31

e--Estimate. F--Forecast. N.M.--Not meaningful.

Related Research
Emerging Markets Sovereign Debt Report 2014: Borrowing To Remain Broadly Unchanged This Year, Feb. 27, 2014 CIS Sovereign Debt Report 2014: Borrowing To Decrease To $51 Billion, Feb. 27, 2014 MENA Sovereign Debt Report 2014:Commercial Borrowing To Increase To $56 Billion, Feb. 27, 2014 Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion, Feb. 27, 2014 Latin American And Caribbean Sovereign Debt Report 2014: Commercial Borrowing Is Likely To Remain Stable At $424 Billion, Feb. 27, 2014 Asia-Pacific Sovereign Debt Report 2014: Commercial Borrowing To Rise By 4.9% To $2.5 Trillion, Feb. 27, 2014 European Sovereign Debt Report 2014: Gross Commercial Borrowing To Decline 2.3% To EUR1.3 Trillion, Feb. 2014 Global Sovereign Credit Trends: Downgrades Are Likely To Outnumber Upgrades Again In 2014, Dec. 17, 2013 Sovereign Ratings And Country T&C Assessments, Feb. 21, 2014 Fiscal And External Weaknesses Constrain African Sovereign Ratings, Despite Strong Economic Growth, Nov. 12, 2013 Subdued Economic Growth In The Americas Constrains Sovereign Creditworthiness, Nov. 8, 2013 Emerging Europe Sovereign Ratings Remain Vulnerable To Political And Fiscal Pressures, Sept. 11, 2013 Standard & Poor's Sovereign Ratings Have No "Home Bias", Feb. 10, 2014 Diverging Fortunes Prevail As Stability Eludes Some MENA Sovereigns, Dec. 17, 2013 Sovereign Risk Indicators, Dec. 13, 2013 (Interactive version also available at http://www.spratings.com/sri )

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