Expert Guide To Credit Spreads: Measuring Company Risk

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1. Understanding Key Entities

G spread measures the difference between the yield of a corporate bond and the yield of a similar maturity Treasury bond. Z spread measures the difference between the yield of a credit-linked note (CLN) and the yield of a similar maturity Treasury bond. Both spreads are used to assess the creditworthiness of a company or entity and are influenced by factors such as the issuer’s financial health, the riskiness of the instrument, and the overall market conditions.

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