In 2016, global junk-bond defaults will rise to the highest level in seven years as a prolonged downturn in commodity prices continues to wreak havoc on company profits and balance sheets, according to Moody's Investors Service.

The ratings company forecasts that the speculative-grade default rate will reach 4 percent this year, up from 3.5 percent in 2015 and the highest level since 2009. The default rate for all of Moody's-rated corporate issuers is estimated to rise to 2.1 percent, also a post-financial crisis high, from 1.7 percent last year.

“Persistently low commodity prices, slowing economic expansion, and widening high-yield spreads will send default rates higher in 2016,” Moody's credit analyst Sharon Ou wrote in a Feb. 29 report. Diminished credit quality, “combined with the sharp increase in defaults and rising investor caution, indicate that the credit cycle is turning.”