Credit spread
Also called: yield spread, credit premium
The extra yield a riskier borrower's bond pays over a government bond of similar maturity, to compensate for the risk of default.
Spreads widen when investors worry about defaults and narrow when they are confident. A high yield usually signals high risk rather than a bargain.
Learn more in these lessons
- Bonds and bond yieldsWhy do bond prices fall when yields rise, and what return does a bond really give?
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