credit spread

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Credit spread

Applies to derivative products. Difference in the value of two options, when the value of the one sold exceeds the value of the one bought. One sells a "credit spread." Antithesis of a debit spread Related: Quality spread.

credit spread

The simultaneous sale of one option and purchase of another option that results in a credit to the investor's account. Thus, more funds are received from the sale than are required for the purchase. Compare debit spread.
References in periodicals archive ?
trueEX has created a contract which will provide a transparent, standardized way for the global investor community to express a view on corporate credit spreads in futures form - something that has never previously been offered before to the futures client community," said Sunil Hirani, CEO of trueEx.
The equity market correction that has been underway since October 17 has not been corroborated by widening of credit spreads.
Taipei, March 24, 2010 (CENS) -- Credit spreads in Taiwan's bond market are likely to stabilize in the first half of 2010, as the local economy continues to recover.
5 billion due to the significant improvement in Morgan Stanley's credit spreads on certain of its long-term debt (debt-related credit spreads), while the prior year included positive revenue of $5.
Compared to the huge body of theoretical literature, empirical studies on credit spreads appear sparse.
Consequently, credit spreads on collateralized bonds understate the issuer's true default-risk premium.
The combination of historically elevated commodity prices and a robust global economy is great for a lot of these countries, so in that environment, credit spreads have narrowed.
Low interest rates and high levels of liquidity have been one of the driving forces for this global boom, pushing up commodities and stock prices and reducing credit spreads and defaults.
Short credit is playing a key role in endowment strategy, say managers, because credit spreads are much too narrow and they're likely to widen.
Because the period of rock bottom created such competition in the capital markets, the 10-year Treasury, which has long been considered the workhorse of real estate finance especially in times of rising short-term rates, has been increasingly replaced as of late with the 5-year Treasury bond, whose credit spreads have compressed markedly.
The second is the increase of arbitrage transactions stimulated by the expansion of credit spreads of comparatively low-rated Japanese companies during the latter part of 2001 and during the early part of 2002.
However, the abrupt and simultaneous widening of credit spreads globally, for both corporate and emerging-market sovereign debt, was an extraordinary event beyond the expectations of investors and financial intermediaries.