Government bonds are generally viewed as the investment with the lowest credit risk in a country and are often considered virtually credit risk free. This perceived safety often makes government bond yields the benchmark for all other bond investments within a country. Since other issuers such as corporations have a higher risk of default, they must offer a premium above the government bond yield to attract investors. The logic here is straightforward. If two bonds offer the same yield, investors will prefer the one with lower risk. This premium is called the credit spread and serves to compensate investors for taking on the additional credit risk associated with corporate bonds. To illustrate, imagine a corporate bond and a government bond, both offering a yield of 3%, given the government bond is virtually credit risk free. An investor would naturally choose it over the corporate bond as it provides the same yield, but without the added risk of default. For the corporate bond to attract investors, it would need to offer a higher yield, say 4% or 5%, to make up for the higher risk of default. This difference in yield is the credit spread.