Meaning and measurement
FINRA describes a credit spread as a relative comparison of yields and distinguishes it from the difference between maturities.[19](#source-cm-spread) To interpret the measure, specify the benchmark, date, currency, maturity and methodology. An absolute difference between rates is conveniently expressed in basis points; it must not be confused with relative percentage growth.
What the spread does not show
The observed difference is not a pure probability of default. It may include liquidity, contract features and other factors. The SEC describes different characteristics of corporate debt that make mechanical comparison unsuitable.[14](#source-cm-corporate) A spread can narrow even while the security’s own yield rises, if the benchmark rises more sharply. It does not promise compensation for all losses and does not provide a trading signal. The [numerical example](/guides/credit-spread-reference-risk/) separately shows both rates and the direction of the change.