Module III· DCM — Investment Grade & Senior DebtBasic
Question
What are yield to maturity (YTM) and credit spread?
Answer
Yield to maturity is the annualized return an investor earns if the bond is held to maturity and all payments are made. Credit spread is the extra yield over a risk-free or swap benchmark that compensates investors for credit risk, liquidity, structure, and market technicals. Bond pricing is usually discussed as benchmark yield plus spread.