Credit Spreads

A Credit Spread is the difference between the yield offered by 'safe' government bonds, and that offered by riskier corporate bonds issued by companies.

As a result of companies being more exposed to insolvency, investors demand higher interest payments for corporate bonds to reward them for the extra risk they take. All bonds are rated by agencies such as Standard & Poor's or Moody's, and as ratings on bonds fall from AAA status, the credit spread tends to widen as bonds are deemed riskier.

Credit spread is also known as yield spread.

What to do if you need more help

If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.

We hope you found this information useful.

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