Credit Spread

Credit spread is the yield or interest-rate difference between a credit instrument and a reference rate or lower-risk benchmark.

Why this matters to income investors

The spread is compensation for credit risk and a key part of a loan’s interest income.

How to use credit spread in your research

Read the borrower or issuer disclosures for collateral, payment priority, covenant terms, and missed payments. Then check how a deterioration could reduce interest income or the value available to support future dividends.

This material is general education and information, not individualized investment, tax, or legal advice.