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The credit yield spread between BAA corporate bond value relative to yiels on 10-year treasury is 1% or 100 points.
The yield differential between two debt instruments with the same maturity but different credit quality is known as a credit spread, often referred to as a yield spread. Credit spreads are expressed in basis points, where one basis point equals one percent of a yield differential.
As an illustration, the credit gap between a 10-year Treasury note with a yield of 5% and a 10-year corporate bond with a yield of 7% is said to be 200 basis points. The terms "bond spreads" and "default spreads" are also used to describe credit spreads. A corporate bond and a risk-free substitute can be contrasted using credit spreads.
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