NEW YORK (Reuters] – The January 2016 lowest level of government debt issuance in emerging market countries was reported by bankers. Bankers believe this is due to the usual busy month’s nerves regarding rising global interest rates as well volatile geopolitical conditions.

JPMorgan, the U.S. financial institution (NYSE:), calculated that $17.9 Billion of EM sovereign bond sales were made last month. This is down 40% from the record-breaking $32.2 billion issued last fiscal year. Many EM countries were looking for COVID funding gaps and were able borrow at historic low rates. [.JPMEGDR]

Analysts at JPMorgan stated that “Heightened rates, higher volatility and a key obstacle for sovereigns seeking to enter the market in January”

“A less hawkish FOMC last Wednesday raises the bar to new issuance even higher now,” pointing out that Chile has issued bonds right after the U.S. Federal Reserve meeting. “This could indicate a greater urgency to finance early in the year, before rates rise further.”

(Graphic: Slowest January for emerging market sovereign debt issuance since 2016: https://graphics.reuters.com/EMERGING-MARKETS/gkvlgjxrmpb/chart_eikon.jpg)

The U.S. central banking, which drives global borrowing costs globally, is expected to hike its interest rates by five percent before the year ends. Five hikes in a very short time span was the last time they did so. This happened from August 2005 through June 2006, when they increased 7 times.

International investors have been increasing the price of EM bonds over U.S. Treasuries since June. Since the beginning of 2020 when the coronavirus pandemic broke out, the average yield for emerging countries borrowing in their currencies has been hovering around 6%. Mid-2019 was not affected by that.

(Graphic: EM sovereign bond yields: https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkawwlvx/Pasted%20image%201643738218207.png)

The breakdown of this year’s issuance numbers also shows that countries with better finances, and classified as investment grade’ credit ratings agencies, have sold the largest share at $16.4 Billion. However, weaker countries high-yielding or ‘junk’-rated have only sold $1.5 Billion.

Turkey is leading the charge in expected issuance for 2012 at $11 Billion, despite being engulfed by a currency crisis the past six months. China, Indonesia, and China are next with $10 and $9 billion.

Saudi Arabia, an oil-rich country, will also likely to issue $6.5 billion in debt, while Kuwait is expected to borrow $6 billion, after its credit rating was reduced last week.

In February, the most mature countries are Turkey and Romania (both $2 billion), and Lithuania ($1.5 billion).

(Graphic: Table: EM sovereign net supply and financing needs: https://graphics.reuters.com/GLOBAL-EMERGING/ISSUANCE/zdpxoanamvx/chart.png)