Credit Spread
Short definition
The credit spread is the issuer- and deal-specific premium over the reference rate. Credit quality, collateral, tenor, sector and the bank’s capital cost set it; it is not the policy rate.
Detailed explanation
Spread prices expected loss (PD × LGD), liquidity, regulatory capital and competition. Collateral and tight covenants compress it; second-lien, long tenor and loose covenants widen it. Ratings and CDS are different markets for related risk; they do not equal each other one-for-one.
In Turkey, commercial-loan spreads also move with banks’ TL/FX funding gap and credit-growth caps. A fixed-coupon bond spread is not the same object as a floating-loan margin.
Why it matters for the CFO
Refinancing and Kd in WACC often move on spread, not on the reference. A wider spread cuts debt capacity independently of the policy rate.
How it is calculated
Kredi marjı = All-in kupon − Referans faiz (ücret hariç kaba kesit)
Variables in the formula
- Spread: Basis points over the reference
How to read it
600 bp is six points over the reference. Compression is not “cheap money”; it is a lower risk premium for that name and collateral. There is no threshold; comps and CDS give direction.
Related calculators
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.