Let's take a more detailed look at the credit spread and how it can be quoted or measured In practice.

Market participants use a variety of spread measures, each suited to different investment strategies and comparisons.

Here are some of the most commonly used measures, which will first introduce and then look at each in more detail separately.

The traditional credit spread calculates the difference between the yield of a corporate bond and a government bond with a similar maturity.

Useful for quick direct comparisons.

The G spread is the difference between the yield of a corporate bond and an interpolated government bond yield with the same maturity providing a standardized benchmark comparison.

The I-spread is the difference between the yield of a corporate bond and an inter interpolated swap rate.

In other words, the interest rate on the fixed leg of an interest rate swap with the same maturity as the bond.

This is commonly used in markets where swap rates serve as benchmarks, especially in Europe where it offers a consistent comparison point for corporate credit risk.

The Z or Z-spread is a more complicated spread calculation where a constant spread is added to each point of the yield curve to make the present value of a bond's cash flows equal to its price.

It's useful for bonds with complex cash flows and is more stable than the G spread as interest rates change.

The ASW spread, also referred to as the par-par asset swap spread, is the spread over the rate at which the bonds cash flows could be swapped into a floating rate using an interest rate swap.

This can be helpful for investors comparing fixed and floating rate returns.

The option adjusted spread or OAS adjusts for the impact of embedded options by calculating the Z-spread after accounting for optionality in the corporate bond, providing a pure review of credit risk.