MARKETS GLOSSARY
Spread
Credit Spread
The amount added to a benchmark rate to determine loan pricing.
What does Spread mean?
The amount added to a benchmark rate to determine loan pricing. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Spread in context
SOFR of 5% plus a 3% spread produces an 8% rate before other adjustments.
Why it matters in financing
Spread can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related markets terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.