So with Junk bonds you have to assume higher rates. I will assume it will be 17.5-20%. The most recent years high default rates were recorded in 1990-91 as they topped the 10.14% and 10.27% respectively.
However the Case for Junk Bonds is as follows:
History tells us that U.S. Treasury securities generally outperformed spread sectors when financial markets were descending into crisis and investors were seeking a flight to safety. But history also tells us that these periods of out-performance were generally short-lived and difficult to time. And as markets emerge from these periods, and valuations begin to normalize, the yield differential of spread product over U.S. Treasuries could offer compelling value.

A look at the graph, (Source), we can see a clear relationship between Junk-Treasury spread and future incremental returns over treasuries. In all years where spread moved over the average spread of junk-treasuries, investors were rewarded with higher returns in junk compared to treasuries. For example, when the spread reached 10.5% in 1990, the forward year junk return was 26% over treasuries.

As the crisis atmosphere recedes and the economy improves, logic says that it will happen sooner or later, default risks are likely to
recede. In this environment, spreads tend to normalize, which can lead to better relative performance from high yield bonds.

The question is, are the wide spreads pricing enough compensation in the form of higher yields to assume this risk of high defaults and low recoveries?

Breakeven Yield Analysis
I use simple breakeven analysis, demonstrated by Altman and J. Bencivenga (1995), to show the breakeven yield (BEY) that must be promised in order to compensate for expected default rates and recovery rates.

The end result is a comparison between actual yields at a point in time and the breakeven yield.