Bond Spread

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Bond Spread

The difference in yield between one bond and another with a lower credit rating. In general, the bond with a lower rating has the higher yield because of the added risk involved. As such, bond spreads are used to compare risk.
References in periodicals archive ?
Despite February's challenging market conditions, our latest analysis of portfolio allocation trends shows a relative preference for local currency EM bond allocations, consistent with the tightening of local currency bond spreads relative to US Treasuries observed last month (which has held up for many in early March).
According to Bank of America Merrill Lynch's (BofAML) Global Economic Weekly report in April, the Sukuk bond spreads currently trade in line with similar-maturity Saudi government conventional bonds.
As we approach 2018, there are a number of factors that have the potential to derail the bull case -- Federal Reserve tightening and balance sheet normalization, interest rate action from the Bank of Japan and European Central Bank, potential Trump administration policy missteps, the risk of open conflict with North Korea, high equity valuations and low bond spreads.
Bond spreads rose sharply during the financial crisis, but currently are not at especially elevated levels relative to the precrisis period.
Finally, the most sophisticated secondary market study to date has been conducted by Guertler, Hibbeln, and Winkelvos (forthcoming), who assess the impact of financial market turmoil and large natural disasters on cat bond spreads by means of panel data methodology.
The exchange rate has now stabilized and international bond spreads have narrowed.
CMBS conduit shops all but shut down in January in the face of widening bond spreads," Trepp's The Good, the Bad and the Ugly CMBS research report said.
We use a wide daily database of CDS and bond spreads, largely extracted from Bloomberg, starting in February 2009 and ending in December 2013.
However, market volatility has recently spread beyond the energy and commodity sectors, leading to a broad decline in global equity prices and a surge in high-yield corporate bond spreads.
Euro area sovereign bond spreads have so far failed to react to the lack of agreement, which may "reflect a perception that the ECB measures and the stronger euro area institutional framework would contain any serious spillover effects," the OECD said.
2009) applied VECM to find out the leading indicator among three variables: stock price volatility, bond spreads and CDS spreads.
However, the authors find that bond spreads came to reflect the specific risks of individual issuing banks starting around 1988 when conjectural guarantees no longer covered (many) bank debentures.