The downturn in commodity sectors will last longer than average and fuel another spike in credit defaults over the next year, according to Moody’s Investors Service.

In a report published Wednesday, Moody’s predicts a speculative-grade issuer default rate of 3.4% by October 2016, with commodity sectors making a disproportionate contribution to the increase. The trailing 12-month credit default rate was 2.7% in October.

“Commodity sectors are facing staggering adverse conditions driven by a potent mix of slower-than-expected global demand and excess supply,” Mariarosa Verde, a Moody’s group credit officer and lead author of the report, said in a news release.

While oil & gas and metals & mining represent 14% of Moody’s global non-financial corporate ratings, they have accounted for 36% of downgrades and 48% of defaults among all corporates globally so far this year.

In the first 10 months of 2015, Moody’s downgraded 28.9% of issuers in the oil and gas and metals and mining sectors — more than triple the 8.8% average downgrade rate across the rest of the universe of non-financial corporate issuers. In addition, about a third of oil and gas and metals and mining issuers remain on negative outlook or under review for downgrade, underscoring that further significant credit challenges are anticipated going forward.

“The sheer volume of commodity related debt poses challenges because it means that credit losses from commodity investments will be substantial for many investors,” Verde said. “Considering the maturing stage of the current credit cycle, mounting losses on commodity company debt seem likely to intensify the capital markets’ swing to greater risk aversion.”

Since 2010, companies in the oil and gas and metals and mining sectors have sold nearly $2 trillion in bonds.

Outside commodity sectors, Moody’s said, a weakening trend in average credit measures globally has not yet led to a material increase in the number of defaults despite worsening corporate credit conditions.

For non-financial corporate issuers excluding oil and gas and metals and mining, the trailing 12-month speculative-grade default rate was 2% in October, just marginally higher than the low 1.9% rate recorded a year earlier.

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