Issuing debt, one of the most common ways for companies to finance their operating needs, has become dramatically harder in 2016, making this the toughest time to sell corporate bonds since 2005, according to data from Janney Montgomery Scott.

The number of bond deals that have closed so far this year is down 37% compared with the same time last year, analysts from Janney said this week. That reflects a greater unwillingness by investors to buy corporate debt amid tumbling commodity prices and worries about China’s economic woes, even as they happily buy lower-yielding Treasurys TMUBMUSD10Y, 0.701% .

But perhaps most notably, the average deal size has increased by 50% to $754 million, the largest average size since 2005.

What this means in practice is that there is little appetite in the market for smaller bond offerings, even from corporations with good credit ratings, making it impossible for small- and midcap companies to obtain financing, said Suneet Chandvani, a distressed debt analyst at Mergermarket.

Although the dollar amount of newly issued bonds so far this year is only marginally behind the same time a year ago, the number of deals is down sharply:

Janney Montgomery Scott

This shift comes as overall earnings are getting squeezed, in what Bank of America has called “the worst quarter for earnings growth” since the financial crisis.

This is a one-two punch for companies, said Jim Caron, a fixed-income portfolio manager with Morgan Stanley Investment Management. “Typically, when earnings go down, leverage goes up... But as long as there’s volatility in the market, small and midcap companies cannot tap the capital markets,” he said.

Selling bonds becomes a privilege

Typically, companies rush to issue new debt after exiting their earnings blackout periods—which usually makes February a popular time for bond offerings.

“This February, however, has been disappointing,” said Jody Lurie, corporate credit analyst at Janney, in a note.

The vast majority of new bonds this year have come from the small number of large companies that have stellar credit ratings and can borrow more than $10 billion at a time, known as “mega offerings.” Investors see them a safer bet than smaller companies with similar credit ratings, she said.

Another appeal of bigger bond issues is they tend to be more liquid later on and therefore it’s easier to find a buyer when an investor wants to sell.

More than half of this year’s investment-grade bonds come from two companies, international brewing behemoth Anheuser Busch InBev SA BUD, -0.75% , which priced the second-largest offering in history, and Apple Inc. AAPL, -3.17% , which sold $12 billion last week. What’s more, the 10 biggest deals account for nearly 76% of issuance.

Source: Janney Montgomery Scott

Junk-bond deals down nearly 80%

The hit to business has been even harder in the high-yield, or junk-bond market. Turmoil in the energy industry and fears of slowing economic growth have particularly crimped demand for those bonds. The number of those higher-risk offerings has plunged 78% from the same time last year, and the dollar volume has skidded 77%.

Just one issuer — Centene Corp. CNC, +1.17% , which provides services to government-sponsored health-care programs — accounts for about 26% of the dollar volume.

A fresh test of the market could come as toy retailer Toys “R” Us Inc.’s tries to replace $1.6 billion in junk-rated bonds. The Wall Street Journal says the company hopes to complete a transaction by the end of April, and it could show companies have to pay more to borrow or pledge more assets to attract buyers.