Fixed Income
Credit Spread
Definition
What is Credit Spread?
The extra yield a debt security offers over a lower-risk reference security of similar maturity.
Example in practice
How This Looks in Practice
A corporate bond yields 4 percentage points above a government bond.
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Related Terms
Fixed Income
Bond
A debt security through which an investor lends money to an issuer in return for promised payments.
Fixed IncomeIssuer
The government, company, or organisation that creates and sells a security.
Fixed IncomeFace Value
The principal amount stated on a bond and usually repaid at maturity.
Money MarketsTreasury Bill
A short-term government debt instrument usually issued at a discount and repaid at face value.