High-Yield Bond Spread
The percentage difference in current yields of various classes of high-yield bonds (often junk bonds) compared against investment-grade corporate bonds, Treasury bonds or another benchmark bond measure. Spreads are often expressed as a difference in percentage points or basis points (which equal one-one hundredth of a percentage point). Investopedia Says:
High-yield spreads are used by investors and market analysts to evaluate the overall credit markets. Higher spreads indicate a higher default risk in junk bonds, and can be a reflection of the overall corporate economy (and therefore credit quality) and/or a broader weakening of macroeconomic conditions.
The higher current yields of junk bonds reflects their greater risk of default to the investor than investment-grade bonds. Related Terms:
Credit Rating
Default Risk
High-Yield Bond
Investment Grade
Junk Bond
Moody's Bond Survey |