Credit Spread (CS) Calculator

What is the credit spread between corporate and government bonds, calculated based on their respective yields?

Spread Formula

( ( 15% / 100.0 ) - ( 25% / 100.0 ) ) * 100.0 = -10.0%.A corporate bond investor and a government bond investor both received returns of 15% and 25%, respectively, on their investments. The difference between these two yields is -10.0%, indicating that the investor in the government bond is losing 10.0% compared to the return earned from the corporate bond.

Spread Basis Points Formula

26% * 100.0 = 2600.0.If a bond investor buys a bond with a spread basis points of 2600.0, and it's stated that this number is equal to "Spread * 100", then this means the spread is 26%. This result number represents the total percentage point value of the spread in decimal form, which is used as a reference for other financial calculations.

Meaning

The Credit Spread (CS) is the difference between the yield on a credit instrument and the interest rate offered by another, typically government bond. In other words, it measures the additional cost associated with lending money to a borrower who has a higher default risk compared to a borrower of a lower risk. The CS value represents how much more expensive it is to lend to borrowers with higher credit risks.