Most of the increase next year will happen outside of the U.S. and Europe. S&P notes that China braked bond sales this year as part of its effort to rein in exploding credit growth, but as bonds mature in 2018 and 2019, issuers are likely to refinance.

Issuance in 2018 will unfold against a backdrop of tighter monetary policy in the U.S. and Europe. The U.S. Federal Reserve began unwinding its balance sheet of Treasuries and mortgage-backed securities this month and today, the European Central Bank announced it was cutting its bond buying program in half to EUR30 billion ($35.4 billion) a month. The moves are expected to lead to higher rates, which will boost borrowing costs.

Today, the yield on the benchmark U.S. Treasury note rose slightly to 2.452%. Tradeweb points out that “investors are demanding more of a premium” to hold U.S. bonds over German debt with the same maturities. The iShares 20+ year Treasury Bond ETF (TLT) fell 0.23% to $122.56. The Vanguard Tax-Exempt Bond Index ETF (VTEB) fell 0.116% to $51.61 and the iShares 5-10 Year Investment Grade Corporate Bond ETF (MLQD) was flat at $49.90.

S&P says the unwinding of the U.S. and ECB bond buying programs should be orderly, which will lessen the effect on companies that want to tap the debt markets. Still, S&P writes, volume could slow in the second half of next year amid a rise in market volatility and higher borrowing costs. Public finance issuance fell off this year after two years of sales fueled by municipal refunding needs. But the rating agency expects it to fall up 5%-8% next year “without a significant impetus at the federal level to stimulate infrastructure spending.”