Intramarket Sector Spread


DEFINITION of 'Intramarket Sector Spread'

The yield spread between two fixed-income securities with the same maturity, within the same sector. The intramarket sector spread can be used to compare relative credit ratings between companies within the same sector. This is due primarily to the fact that firms issuing debt with an equal term, all else held constant, will only exhibit yield differences as a result of their credit ratings.

BREAKING DOWN 'Intramarket Sector Spread'

For example, a yield discrepancy between two transportation corporate bonds with the same maturity, would constitute an intramarket-sector spread. If at issuance the bonds trade with an equal coupon (yield) and down the road a spread develops between the two bonds, the most probable reason would be a change in credit rating for one of the firms.

  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
  3. Bond

    A debt investment in which an investor loans money to an entity ...
  4. Spread

    1. The difference between the bid and the ask price of a security ...
  5. Intermarket Spread Swap

    A swap transaction meant to capitalize on a yield discrepancy ...
  6. Sector

    1. An area of the economy in which businesses share the same ...
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