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.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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 ?

While the recent developments (steep fall in yield spreads, higher participation in longer tenor bills) in the debt market point to the end of tightening cycle, we think the inflation readings in the next few months remain critical in determining the monetary policy outlook.

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However, he also noted that high yield spreads have narrowed quickly since the beginning of the year, which he believes should provide a steadier platform for issuance in 2019.

Atlantic sees better entry point into S&P Global, upgrades to Overweight

Yield spreads between five- and 30-year Treasuries narrowed last week to their lowest level since August 2007.

Fed official blames central bank for flattening yield curve

Inter-Bank Market Rates: In the final Asian trade, It was hard to find a pulse in the currency market as dealers bedded down for the Christmas holidays, though the mood remains bullish for more dollar gains in the New Year as yield spreads widen in its favour.

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Summary: Shrinking liquidity and widening yield spreads could dampen demand

Debt financing to grow across Middle East in 2016

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.

Yield curve and predicted GDP growth, October 2014

We examine the impact of firms' board ties on bond yield spreads. Prior literature associates board connectedness with improved access to resources due to visibility and reputation arising from greater board capital.

Board ties and the cost of corporate debt

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.

A time-series postmortem on Eurozone financial integration and the debt crisis: modeling and policy implications

With the situation worsening by the hour though and the markets having clearly demonstrated a looming doomsday, with perilously high bond yield spreads, prompt action must be taken.

Saxo Bank releases new video commenting on Eurozone crisis

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.