Intramarket Sector Spread

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Credit Rating

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

    The period of time when temporary yield discrepancies between ...
  3. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
  4. Intermarket Spread Swap

    A swap transaction meant to capitalize on a yield discrepancy ...
  5. Bond

    A debt investment in which an investor loans money to an entity ...
  6. Sector

    1. An area of the economy in which businesses share the same ...
Related Articles
  1. Achieving Optimal Asset Allocation
    Investing Basics

    Achieving Optimal Asset Allocation

  2. How To Create A Modern Fixed-Income ...
    Investing Basics

    How To Create A Modern Fixed-Income ...

  3. Introduction To Convertible Preferred ...
    Bonds & Fixed Income

    Introduction To Convertible Preferred ...

  4. The Bond Market: A Look Back
    Mutual Funds & ETFs

    The Bond Market: A Look Back

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center