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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; [email protected]

Secondary Contacts:

Liliana Negrila, Frankfurt +49 69 33 999-248; [email protected]

Alexander Petrov, London (207)1767115; [email protected]

Table Of Contents

Related Research

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 1

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Global Sovereign Debt Report 2014: Borrowing ToIncrease By 2.7% To $7.1 Trillion

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&P’s 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. $) 2013e 2014f

Gross long-term commercial borrowing 6,955 7,140

Of which amortization of maturing long-term debt 4,369

Of which net long-term commercial borrowing 2,771


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Global Sovereign Debt Report 2014: Borrowing To Increase By 2.7% To $7.1 Trillion

Table 1

Sovereign Commercial Issuance And Debt (cont.)

Total commercial debt stock (year-end) 42,137 44,707

Of which short-term debt 5,339 5,340

Of which debt with original maturity greater than one year 36,798 39,368

(% GDP)

Gross long-term commercial borrowing (% GDP) 9.5 9.4

Of which amortization of maturing long-term debt (% GDP) 5.7

Of which net long-term commercial borrowing (% GDP) 3.6

Total commecial debt stock (year end) (% GDP) 57.8 58.8

Of which short-term debt (% GDP) 7.3 7.0

Of which debt with original maturity greater than one year (% GDP) 50.5 51.7

e--Estimate. f--Forecast.

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. $)--

--Total commercial debt

at year-end (incl.

short-term, bil. $)--

Short-term

debt (% of

total)

Foreign

currency

debt (%

of total)

Long-term

fixed-rate

debt (% of

total debt)

Inflation-indexed

debt (% of total)

Bi-/

Multilateral

debt (% of

total)

Rollover

ratio (%

of GDP)

2013e 2014f

2014

(% of

total) 2013e 2014f

2014

(% of

total) 2013 2013 2013 2013 2013 2014

Abu Dhabi 0.0 0.0 0.00 5.9 5.1 0.01 0 95 44 0 0 1

Albania 1.1 1.1 0.02 5.1 5.9 0.01 30 41 42 0 35 24

Andorra 0.9 0.0 0.00 1.1 1.1 0.00 20 0 17 0 0 7

Angola 9.8 12.3 0.17 27.1 32.1 0.07 10 60 57 33 23 6

Argentina 22.8 18.0 0.25 110.7 90.7 0.20 0 80 50 30 12 3

Aruba 0.3 0.2 0.00 1.8 2.0 0.00 2 47 94 0 3 5

Australia 57.5 74.5 1.04 275.3 322.4 0.72 3 0 90 7 0 2

Austria 30.8 29.1 0.41 252.3 257.2 0.58 2 0 96 0 0 8

Azerbaijan 0.1 0.3 0.00 0.8 1.0 0.00 5 84 75 0 84 1

Bahamas 0.2 0.4 0.01 4.7 5.1 0.01 18 26 19 0 6 11


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Table 2

Global Sovereign Debt Structures And Rollover Ratios (cont.)

Bahrain 2.8 3.4 0.05 13.9 16.4 0.04 23 49 77 0 5 12

Bangladesh 3.1 4.2 0.06 22.2 23.4 0.05 15 52 83 0 52 7

Barbados 0.2 0.1 0.00 3.7 3.8 0.01 28 35 60 0 11 30

Belarus 2.8 1.5 0.02 5.6 8.2 0.02 4 90 43 0 66 4

Belgium 62.0 46.9 0.66 492.6 507.1 1.13 9 0 90 0 0 15

Belize 0.0 0.0 0.00 0.7 0.6 0.00 20 82 22 0 44 16

Bermuda 0.8 0.0 0.00 2.3 2.1 0.00 5 98 95 0 0 5

Bolivia 0.9 0.4 0.01 6.2 5.6 0.01 0 46 85 15 34 2

Bosnia and

Herzegovina

0.0 0.0 0.00 0.0 0.1 0.00 0 100 51 0 100 3

Botswana 0.0 0.0 0.00 0.8 0.5 0.00 3 67 30 0 67 2

Brazil 280.8 272.9 3.82 918.9 975.8 2.18 3 4 39 35 0 9

Bulgaria 1.2 2.7 0.04 6.8 8.9 0.02 2 55 85 0 27 2

Burkina Faso 0.0 0.0 0.00 0.0 0.1 0.00 0 97 72 0 100 1

Cameroon 0.3 1.0 0.01 1.7 2.3 0.01 3 72 98 0 68 1

Canada 96.2 91.0 1.27 668.0 727.0 1.63 27 1 64 7 0 9

Cape Verde 0.0 0.1 0.00 0.9 1.0 0.00 1 47 92 0 52 4

Chile 5.1 6.0 0.08 33.0 37.8 0.08 0 13 34 66 3 0

China 254.6 278.3 3.90 1,376.8 1,595.8 3.57 3 1 97 0 0 1

Colombia 19.9 19.3 0.27 124.4 130.1 0.29 2 27 94 0 11 4

Congo -

Brazzaville

0.8 0.3 0.00 2.4 3.7 0.01 3 85 73 0 51 1

Cook Islands 0.0 0.0 0.00 0.0 0.0 0.00 0 92 100 0 100 0

Costa Rica 3.4 4.2 0.06 16.8 19.0 0.04 5 31 65 17 6 4

Croatia 6.9 6.3 0.09 36.6 37.8 0.08 14 59 61 0 5 16

Curacao 0.0 0.0 0.00 0.0 0.0 0.00 0 0 100 0 100 0

Cyprus 3.9 2.6 0.04 10.4 5.7 0.01 4 1 61 0 56 24

Czech

Republic

15.4 13.7 0.19 88.9 94.1 0.21 7 19 76 0 4 7

DR Congo 0.3 0.0 0.00 2.7 3.4 0.01 0 78 95 1 55 1

Denmark 15.2 14.8 0.21 158.7 160.0 0.36 4 10 93 3 0 6

Dominican

Republic

3.0 2.6 0.04 12.5 12.6 0.03 0 73 74 0 47 4

Ecuador 0.5 1.2 0.02 11.1 9.4 0.02 0 100 78 0 51 3

Egypt 13.4 17.3 0.24 227.0 236.7 0.53 45 18 44 0 9 40

El Salvador 2.1 2.6 0.04 6.6 8.6 0.02 4 100 63 0 46 6

Estonia 0.0 0.0 0.00 0.0 0.0 0.00 0 0 0 0 100 0

Fiji 0.1 0.0 0.00 1.8 1.9 0.00 3 27 97 0 15 1

Finland 18.0 17.0 0.24 116.7 125.6 0.28 4 0 78 0 0 5

France 221.1 226.6 3.17 1,894.4 1,984.3 4.44 12 0 76 12 0 13

Gabon 0.5 0.5 0.01 2.5 2.9 0.01 2 93 83 1 38 2

Georgia 0.1 0.3 0.00 1.3 1.8 0.00 2 84 75 0 74 3

Germany 243.0 228.9 3.21 1,483.0 1,492.2 3.34 5 0 90 5 0 7


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Table 2


Ghana 4.5 4.8 0.07 13.7 16.5 0.04 20 54 41 0 39 14

Greece 0.0 0.0 0.00 131.7 114.2 0.26 5 4 26 0 68 22

Grenada 0.0 0.0 0.00 0.4 0.4 0.00 12 81 47 0 47 14

Guatemala 0.5 0.8 0.01 8.0 8.4 0.02 0 59 67 0 40 1

Honduras 1.6 0.9 0.01 4.8 4.7 0.01 0 69 80 0 41 3

Hong Kong 0.0 0.0 0.00 1.4 0.2 0.00 0 87 100 0 0 0

Hungary 17.9 13.4 0.19 86.5 94.5 0.21 14 41 55 3 13 20

Iceland 0.8 0.4 0.01 11.9 11.5 0.03 2 27 84 0 6 4

India 93.2 100.3 1.41 797.9 901.6 2.02 8 6 91 0 6 4

Indonesia 10.6 16.5 0.23 122.1 130.9 0.29 20 61 77 0 25 4

Ireland 10.3 10.4 0.15 149.7 143.3 0.32 8 0 80 0 37 10

Israel 31.9 24.2 0.34 195.9 196.8 0.44 1 14 66 26 0 6

Italy 332.7 338.0 4.73 2,239.5 2,325.7 5.20 8 0 72 12 0 21

Jamaica 0.0 0.0 0.00 14.4 14.5 0.03 0 77 59 0 22 1

Japan 1806.8 1824.5 25.55 10,254.2 10,777.6 24.11 19 0 95 1 0 65

Jersey 0.0 0.4 0.01 0.0 0.4 0.00 N.M. N.M. N.M. N.M. N.M. 0

Jordan 1.1 6.6 0.09 17.7 18.3 0.04 30 48 14 0 24 33

Kazakhstan 5.2 5.4 0.08 23.5 24.5 0.05 2 18 52 1 18 1

Kenya 3.1 2.9 0.04 14.0 15.1 0.03 15 42 51 0 38 11

Korea 47.8 100.6 1.41 419.9 459.4 1.03 2 2 99 0 0 5

Kuwait 0.0 0.0 0.00 5.6 5.6 0.01 0 100 100 0 0 0

Latvia 0.0 3.9 0.05 7.7 8.8 0.02 7 27 71 0 49 12

Lebanon 13.9 13.1 0.18 59.5 64.1 0.14 2 41 97 0 6 21

Liechtenstein 0.0 0.0 0.00 0.0 0.0 0.00 N.M. N.M. N.M. N.M. N.M. 0

Lithuania 2.2 3.3 0.05 15.1 17.2 0.04 3 80 96 0 12 4

Luxembourg 4.0 1.3 0.02 9.5 10.8 0.02 0 0 100 0 0 0

Macedonia 0.6 0.1 0.00 2.3 2.3 0.01 25 78 55 0 37 11

Malaysia 26.2 25.8 0.36 168.2 181.1 0.41 1 3 99 0 1 4

Malta 1.0 0.8 0.01 6.6 7.0 0.02 5 0 91 0 1 8

Mexico 57.6 71.2 1.00 336.4 391.0 0.87 12 19 53 24 13 6

Mongolia 1.7 1.7 0.02 4.4 5.8 0.01 5 77 95 0 46 5

Montenegro 0.2 0.4 0.00 1.0 1.3 0.00 6 0 94 0 54 3

Montserrat 0.0 0.0 0.00 0.0 0.0 0.00 2 98 0 0 98 0

Morocco 11.6 13.2 0.18 54.5 62.5 0.14 16 23 76 0 17 16

Mozambique 0.1 0.6 0.01 1.2 2.8 0.01 3 88 89 9 82 1

Netherlands 67.3 65.0 0.91 465.1 483.2 1.08 13 0 91 0 0 13

New Zealand 9.1 4.2 0.06 55.8 60.1 0.13 6 0 81 12 0 2

Nigeria 2.3 14.0 0.20 44.9 56.3 0.13 30 16 57 0 13 5

Norway 10.7 11.6 0.16 75.1 85.7 0.19 36 0 64 0 0 5

Oman 0.0 1.3 0.02 3.0 3.5 0.01 0 27 98 0 0 1

Pakistan 17.4 19.1 0.27 104.9 110.9 0.25 39 32 61 0 31 29

Panama 1.3 1.0 0.01 12.0 12.8 0.03 3 100 84 0 23 2


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Table 2


Papua New

Guinea

0.0 0.0 0.00 3.6 4.4 0.01 56 44 44 0 44 19

Paraguay 1.0 0.8 0.01 1.2 1.9 0.00 0 81 62 0 59 1

Peru 1.8 1.3 0.02 31.5 30.7 0.07 8 42 73 0 19 3

Philippines 11.2 14.5 0.20 114.3 124.1 0.28 7 32 88 0 12 6

Poland 43.4 36.1 0.51 255.1 276.2 0.62 1 30 76 4 7 4

Portugal 19.2 19.1 0.27 199.6 202.1 0.45 12 12 63 0 35 22

Qatar 0.0 0.0 0.00 34.9 30.4 0.07 6 59 100 0 0 3

Ras Al

Khaimah

0.5 0.4 0.01 1.8 1.8 0.00 0 98 98 2 0 5

Romania 11.2 12.4 0.17 51.4 58.2 0.13 4 53 89 0 25 7

Russia 33.0 38.5 0.54 174.7 196.9 0.44 0 25 98 0 2 1

Rwanda 0.4 0.0 0.00 0.9 1.2 0.00 11 79 87 0 58 3

Saudi Arabia 0.0 0.0 0.00 20.1 15.9 0.04 0 0 100 0 0 1

Senegal 0.5 1.1 0.02 2.7 3.1 0.01 3 69 87 0 62 6

Serbia 6.4 4.0 0.06 16.2 18.1 0.04 1 78 77 0 35 11

Sharjah 0.4 0.5 0.01 1.5 1.7 0.00 0 26 7 0 0 1

Singapore 19.5 19.8 0.28 323.8 331.2 0.74 11 0 89 0 0 16

Slovak

Republic

9.7 7.8 0.11 47.3 48.0 0.11 0 7 82 0 10 4

Slovenia 8.1 5.3 0.07 29.9 30.9 0.07 3 0 94 0 2 10

South Africa 18.4 22.0 0.31 150.2 165.6 0.37 14 8 67 19 1 7

Spain 164.3 170.7 2.39 986.7 1,067.4 2.39 11 0 83 0 5 15

Sri Lanka 6.4 5.8 0.08 39.7 42.1 0.09 12 66 91 0 21 13

Suriname 0.0 0.0 0.00 0.0 0.0 0.00 2 100 42 0 100 0

Sweden 34.2 22.9 0.32 196.5 202.0 0.45 14 30 70 15 0 9

Switzerland 7.3 6.5 0.09 99.1 96.3 0.22 14 0 86 0 0 3

Taiwan 31.3 29.3 0.41 178.2 185.2 0.41 4 0 90 0 0 6

Thailand 15.6 13.4 0.19 124.3 127.8 0.29 3 2 81 0 2 3

Trinidad and

Tobago

2.4 1.9 0.03 9.3 9.1 0.02 8 16 69 0 8 10

Turkey 80.0 83.4 1.17 249.1 238.5 0.53 0 31 61 16 9 7

Uganda 0.1 0.1 0.00 3.1 3.3 0.01 15 50 85 0 50 4

Ukraine 15.3 4.8 0.07 48.0 49.0 0.11 1 57 83 0 18 4

United

Kingdom

245.7 237.0 3.32 2,349 2,501 5.59 4 0 74 22 0 6

United States 2,140.0 2,255.0 31.58 11,869.0 12,677.0 28.36 13 0 78 8 0 17

Uruguay 2.6 0.9 0.01 19.4 19.6 0.04 0 46 48 47 10 1

Venezuela 22.2 16.9 0.24 92.8 107.7 0.24 1 48 64 4 9 2

Vietnam 5.0 2.9 0.04 30.9 33.0 0.07 20 60 56 0 57 10

Zambia 0.3 0.9 0.01 4.5 5.4 0.01 17 56 68 0 44 6

Breakdown by region

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


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Table 2


G7 5,086 5,201 72.84 31,030 32,758 73.27

Euro Area 1,195 1,173 16.43 8,523 8,814 19.71

Asia-Pacific 2,417 2,535 35.51 14,420 15,419 34.49

Europe (incl.

CIS)

1,785 1,719 24.07 12,679 13,203 29.53

Latin

America

431 424 5.93 1,783 1,904 4.26

Middle-East

Northern

Africa

44 56 0.78 445 462 1.03

North

America

2,236 2,346 32.86 12,537 13,404 29.98

Sub-Saharan

Africa

41 61 0.85 273 315 0.71

Breakdown by foreign currency rating category

AAA 751 725 10.16 5,756 6,054 13.54

AA 4,644 4,779 66.93 27,029 28,719 64.24

A 172 204 2.85 1,134 1,210 2.71

BBB 1,068 1,108 15.52 6,327 6,777 15.16

BB 185 207 2.90 959 1,005 2.25

B 97 94 1.32 773 802 1.79

CCC 38 23 0.32 159 140 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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Additional Contact:

SovereignEurope; [email protected]


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