Quality spread

Quality spread

Difference between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating. For instance, the difference between yields on Treasuries and those on single A-rated industrial bonds. Also called credit spread.

Quality Spread

The difference in the yield of two debt securities whose features are identical other than the differing creditworthiness of the issuers. Issuers with lower credit ratings must issue debt at a higher interest rate to compensate holders for the added risk of default. The quality spread can help potential bond investors make decisions as to whether the higher yield is worth the extra risk. See also: Quality Spread Differential.