After several years of benign trading conditions marked by below-average default rates, the United States high-yield corporate bond market started to deteriorate this year and, in the opinion of one expert, will deteriorate further next year.Edward Altman, the Max L Heine Professor of Finance at New York University's Stern School of Business, said it was not yet clear whether the high-yield market was returning to GFC levels but the favourable conditions that have prevailed since 2011 are over.Altman, who was speaking at a Centre for International Finance and Regulation conference in Sydney yesterday, said the US market for non-investment grade debt issuance was worth about US$1.6 trillion.The blowout in high-yield bond default rates in 2008 and 2009 was one of the key factors in the capital market turmoil that marked the GFC."The market is pointing to higher defaults but the question is whether it will be a bubble that bursts or calm down," Altman said.The high-yield market's long-term average default rate is a little over three per cent. At the height of the GFC the default rate went above ten per cent.The current default rate is 2.4 per cent. Altman expects it to rise to 2.6 per cent by the end of the year and then go above four per cent some time next year. A lot of the defaults have been in the energy and mining sectors, where conditions are expected to get worse.Altman said defaults rates at that level have been a leading indicator of recession in past cycles.Stressed bond issuers looking to refinance or recapitalise will find that post-GFC regulation has made the prospect of new lending to such borrowers much less likely.Altman said: "In my opinion it would not be easy for these companies to move from debt to equity at a reasonable price."He said there had been a lot of debt issued by companies with CCC ratings (the lowest grade) over the past five years, and these issuers have a historically high "mortality rate."