The Federal Reserve may not have hiked interest rates in several years, but the expectation of an imminent rate increase has already spooked the new-issue market.

Corporate issuance of bonds, which has dried up in the past few weeks, has fallen to an 18-month low, pointed out the Financial Times. Probably, added the FT, less than $10 billion of investment-grade debt will be trotted out this week. That’s the fifth straight week the new-issue market will come in below that level, according to Thomson Financial.

The market hasn’t been this inactive since late 2002, according to the FT, citing Thomson chief market strategist Richard Peterson. “It’s even quieter than we expected,” said Jim Merli, global head of fixed income syndicate at Lehman Brothers, according to the paper.

In April, just $31.7 billion of corporate bonds were brought to market, far below the March total of $91.1 billion.

Rising interest rates in the secondary markets have played a major role. While the Fed has not yet hiked short-term rates, in April alone the yield on 10-year Treasury notes surged from 3.9 percent to 4.5 percent.

One big source of new issuance that has especially dried up is the refinancing market; most companies that wanted to issue new paper to replace higher-yielding, older paper probably have done so. And, as rates creep up, the appeal of refinancing diminishes.

The recent strong employment reports have only put added upward pressure on rates.