Global junk-rated corporate default rates in December hit their lowest level for 26 years, but the credit turmoil and the prospect of weaker US and European economies point to a sharp rise this year, according to Moody’s.

The agency said it expected that last month would mark the nadir of the default cycle, and predicted global default rates would jump more than fivefold to hit 4.8 per cent by the end of 2008, and hit the long-term average of 5 per cent in 2009.