Credit Spread
Fixed Income
Definition
The yield difference between corporate bonds and government bonds of similar maturity, reflecting the additional risk premium investors demand for corporate credit risk over risk-free government securities.
Key Points
- Widens during economic stress
- Narrows during economic confidence
- Key indicator of market risk appetite
Examples
Corporate bond yields 5% vs Treasury 3% = 200bp spreadWidening spreads signal credit concernsQuick Info
Category
Fixed Income
Related Topics
yield spread
credit risk
corporate bonds
Related Terms
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