(Bloomberg) — Dollar loans to Chinese borrowers have cratered this year, thanks to both a decline in demand and increased wariness among lenders amid escalating U.S.-China tensions.

Syndicated dollar loan issuance to Chinese borrowers has tumbled 62% from the start of the year through May 17, to $7.3 billion, according to data compiled by Bloomberg. That’s the lowest level since 2012.

“Volume is unlikely to rebound anytime soon,” said Fang Lei, a Hong Kong-based managing director of Asia Pacific debt origination and advisory at Credit Agricole (PA:CAGR) SA. “Some companies are sitting on the sidelines watching the U.S.-China trade war.”

Many instead are turning to domestic funding, taking advantage of policy makers’ moves to bolster credit growth as China’s economy slows. Yields on weaker companies’ bonds have fallen near the lowest in 30 months, luring issuers including developers back home for funding. Local corporate-bond issuance has jumped 33.5% so far, to a record high of 4.4 trillion yuan ($637.3 billion).

A weakening exchange rate has also enhanced the appeal of yuan borrowing, and raised the risk of servicing overseas debt. Dollar-bond issuance has also slowed this year, though not by as much as in the loan market. Chinese entities’ dollar-note sales are just 4.9% down on last year, according to data compiled by Bloomberg.

Meanwhile, the prolonged trade dispute has reduced the incentive for manufacturing investment, amid fear Chinese products will be subject to additional tariffs. Banks have turned cautious, according to Steve Wang, Hong Kong-based deputy head of research at BOC International Holdings Ltd.

“Economic uncertainty has been holding back Chinese companies from significant spending plans and in turn has dampened demand for offshore loans,” said Benjamin Ng, head of Asia Pacific debt syndicate and acquisition finance group at Citigroup Inc (NYSE:C). in Hong Kong.