understanding financial jargon
As a result of companies generally being more exposed to insolvency than governments, investors demand higher interest payments for corporate bonds to reward them for the extra risk they take. Bonds are rated by agencies such as Standard & Poor's or Moody's, and as ratings on bonds slide down the scale from AAA status, the yield spread will widen as those bonds are deemed riskier. By the same token if the yield spread on a particular bond is narrowing, it suggests the risk of owning the bond is falling.
Yield spread is also known as credit 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.
Copyright © Steve Gears Associates. All rights reserved. No portion of this site may be reproduced without written permission. All Trademarks are freely acknowledged.The information on this site is based on UK data unless otherwise indicated. Non-UK visitors should check with experts within their own legal jurisdiction before relying on information presented here.