Yield spread

(redirected from Yield Spreads)

Yield spread

The difference in yield between different security issues usually securities of different credit quality.

Yield Spread

The difference in yield between two bonds or other debt securities with different credit quality. For example, an investment grade bond and a junk bond have different yields to compensate the bondholder for the risk (or lack of risk). The difference between these is called the yield spread.

yield spread

The difference in yield, at a given time, between two bonds or between different segments of the bond market. For example, the yield spread between AAA-rated bonds and A-rated bonds may be one half of 1% at a particular time. Likewise, the yield spread between long-term taxable and nontaxable bonds may be 2%. Yield spread may be caused by any of various factors including maturity difference, risk difference, or taxability difference.

Yield spread.

Yield spread describes the difference between the yields on two different debt instruments. For example, you can calculate the yield spread on two bonds, by subtracting the yield on one bond from the yield on the other.

Yield spread is helpful in comparing bonds with different maturities, credit ratings, and tax status. In general, securities with longer maturities tend to have higher yields than those with shorter maturities. And securities with higher credit ratings have lower yields than those with lower ratings.

References in periodicals archive ?
Second, other researchers have postulated that the underlying determinants of the yield spread today are materially different from the determinants that generated yield spreads during prior decades.
Greek yield spreads (with Germany) rose sharply last week, Portuguese yields have turned higher, and the Spanish spread has also started to widen.
Our main result appears robust and includes significant negative (positive) changes in yield spreads to announcements of additions (departures) of highly connected directors.
The official integration of Eurozone financial markets was mostly a matter of membership in 1999 and resulted in sovereign yields converging across Eurozone countries, but yield spreads quickly diverged during the financial crisis.
However, with GDP projections now positive and with investors appetite for risk returning we will see yield spreads narrowing over a sustained period which will result in secondary assets performing better on a total return basis.
Greek bank shares jumped 7% at Monday's open as investors welcomed the improved bailout terms for Greece agreed at the euro zone summit on Friday and yield spreads tightened.
The recent widening of CMBS yield spreads reflects the capital markets' negative evaluation of default risk in CMBS tranches.
Figure 1 illustrates the CBO five-year-ahead deficit/GDP forecasts and the corresponding yield spreads over the January 1983-August 2005 period.
The authors found that higher yield spreads signal greater risk inherent in the issuing company, as do debt issues with callable options.
For example, what proportion of yield spreads on corporate bonds is explained by credit risk?
Growing divisions on budgetary policy could significantly widen government bond yield spreads between the more and the less virtuous countries.
Some of these proposals suggest using subordinated-debt yield spreads to supplement capital ratios as triggers for the prompt corrective action provisions of the Federal Deposit Insurance Corporation Improvement Act.