What is Credit Spread?
Credit Spread The yield difference between a corporate bond and a government bond of similar maturity and currency, reflecting default risk, liquidity, and other credit risk factors.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Credit Spread” Used in Practice?
A widening credit spread signals rising perceived default risk in the corporate bond market compared to government securities.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Credit Spread?
The yield difference between a corporate bond and a government bond of similar maturity and currency, reflecting default risk, liquidity, and other credit risk factors.
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