QUICK DEFINITION
Credit Spread is the additional yield on a credit-risky bond relative to a lower-risk benchmark of similar maturity.
WHY IT MATTERS
Why Credit Spread matters in bond markets
Credit spreads are among the clearest market measures of changing risk appetite and expected losses.
MARKET CONTEXT
How to think about it
Bond investors use credit spread as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Credit Spread important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Credit spreads are among the clearest market measures of changing risk appetite and expected losses.