G-Spread
Corporate Credit Analysis glossary · Corporate Credit Analysis
Definition
A bond's yield minus the yield of the corresponding Treasury or other government benchmark of equal maturity; the simplest credit-spread measure but ignores the shape of the yield curve.
G-Spread in plain English
A bond pays you interest, but so does lending to the government, which is considered basically risk-free, so the extra yield a company's bond pays above a same-maturity government bond is the reward you demand for the risk it might not pay you back. The G-spread is exactly that gap: the bond's yield minus the matching Treasury's yield. If a 5-year company bond yields 6% and a 5-year Treasury yields 4%, the G-spread is 2%, your 'danger pay' for lending to the company instead of the government. It's the simplest credit-risk gauge, though it ignores subtler details of how yields differ across every maturity.
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