Yield spread


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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 ?
The most recent improvement in The Conference Board LEI was largely the result of monetary policies and improved stock prices, although business failures (inverted) and the yield spread were also strong positive contributors to the LEI in the second half of 2014.
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The yield spread between this issue and a longer-term bond of Promsvyazbank (-/Ba2/BB-) PROMBK-19 has been in place only since June 26.
The economic fundamentals include the federal funds rate and interest rate spreads, such as the 1-year-1-month LIBOR spread and the 10-year nominal Treasury--10-year Treasury Inflation-Protected Securities (TIPS) yield spread.
What this means is if the same money is spent on options, and the patterns of the historic stock market repeat, the returns will come out pretty much the same over the long haul whether you use an annual point-to-point or a yield spread or averaging or a monthly cap.
State-controlled Qtel, via its Qtel International Finance arm, is planning to sell $900 million in five-year notes at a yield spread of 415 basis points over comparable US Treasuries, said IFR, a Thomson Reuters service, and confirmed by the sources.
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Also, while bond yields clearly influence business cycle conditions, there is less reason to expect feedback from the yield spread to business cycle conditions.