how does credit spread affect bond price 
the credit spread is the result of the difference in risk corporate bonds come with more risk than u s treasury bonds so they need to offer higher yields to attract investors the price you pay for either bond may be the same but you are assuming a higher risk with corporate bonds which means you have the potential to earn more can you lose money on a credit spread as with any investment strategy there is risk and the possibility that you could lose money on a credit spread you could lose money if the premiums received are less than the premiums paid the bottom linea credit spread is relatively straightforward the difference in yield between two debt securities that mature simultaneously but have different risks bonds with higher risks typically have higher yields the term credit spread also refers to a strategy that involves purchasing one option while selling another similar option with a different strike price the yield spread between corporate bonds and 10 year treasurys is vital for gauging economic health and investor sentiment a good yield spread depends on perceptions about economic conditions with narrow spreads indicating confidence and stability while widening spreads suggest increased concern about economic risks by understanding and interpreting these spreads investors can gain valuable insights into the economy and make more informed investment decisions 