Think of a lender adding a risk surcharge above a reference borrowing price.
01
Go deeper
A spread can compensate for default risk, trading difficulty and other differences. Compare similar maturities and use the stated benchmark. Wider spreads can indicate investors demand more compensation.
02
Make it concrete
Hypothetical illustration. Hypothetically, a corporate bond yields 6% and a comparable Treasury yields 4%: a 2-percentage-point, or 200-basis-point, gap.
03
When you read a headline
Spreads are not a pure default-probability measure; liquidity and contract terms matter.